164  Bulletin  of  tJie  University  of  Texas 

on  the  ground  that  the  judicial  department  of  the  government 
had  no  authority  to  interfere  with  the  executive  department  in 
the  performance  of  duties  not  ministerial  in  character.^  Un- 
blushing bribery  was  charged  in  connection  with  the  passage  of 
this  International  subsidy,  and  though  the  jury  of  a  district 
court  found  the  allegation  of  fraud  to  be  untrue,  the  charges 
were  so  rife  and  upon  such  high  authority  as  to  give  them 
credence.^  It  was  a  cause  of  wonder  at  the  time  that  members 
of  the  Twelfth  Legislature  whose  income  was  their  per  diem 
should  at  the  end  of  the  session  be  able  to  buy  fine  horses  and 
furniture  and  to  travel  north.^ 

Except  for  the  increase  in  salaries  under  the  Throckmorton 
government  and  the  wastefulness  of  the  constitutional  conven- 
tion of  1868,  the  expenditures  to  1870  were  not  excessive.  This 
is  not  true,  however,  for  the  period  of  the  Reconstruction  there- 
after. Expenditures  then  were  beyond  the  ability  of  the  state, 
and  the  best  evidence  thereof  is  that,  despite  heavy  taxation, 
bonds  were  sold  to  pay  current  expenses  and  a  large  floating- 
debt  was  accumulated.  The  Twelfth  Legislature  exhibited  such 
a  degree  of  profligacy  and  open  disregard  of  the  state's  eco- 
nomic condition  that  it  is  notorious.  Matters  might  have  been 
worse,  though,  and  that  they  were  not  so  was  due  mainly  to 
the  integrity  of  the  governor  in  the  administration  of  the  public 
finances.* 


^Bledsoe  v.  the  International  Railroad  Company,  40  Tex.,  537   (1874). 

-Bledsoe  v.  the  International  Railroad  Company,  40  Tex.,  537.  Mes- 
sage of  Governor  Coke,  January  12,  1875.  The  San  Antonio  Daily 
Herald,  October  4  and  20,  and  November  24,  1870.  The  Houston  Daily 
Telegraph,  February  23  and  October  19,  1871. 

^Clippings  from  the  State  Gazette  and  Flake's  Bulletin  in  the  San 
Antonio  Daily  Herald,  September  27  and  October  20,  1870. 

"Ramsdell,  Reconstruction  in  Texas,  p.  318. 


Chapter  3. 


RECEIPTS. 


A.     Tlie  Property  Tax. 

The  chief  source  of  receipts  during  this  period  was  taxation, 
and  the  main  tax  was,  as  in  previous  periods,  the  ad  valorem 
tax  upon  real  and  personal  property.  The  work  of  assessment 
and  collection  was  performed  until  1870  by  an  assessor  and 
collector,  but  thereafter  assessment  was  by  the  justices  of  the 
peace,  and  collection  by  the  sheriff  of  each  county.  Under  the 
provisional  governments  assessment  and  collection  were  subject 
to  special  difficulties.  The  war  had  disorganized  the  machinery 
of  administration,  and  in  many  of  the  counties  it  was  impos- 
sible, owing  to  the  opposition  of  the  people  to  military  author- 
ity, to  secure  an  assessor  and  collector.  In  1868,  for  example, 
thirty-nine  counties  out  of  one  hundred  and  twenty-five  had 
vacancies  in  the  office.  It  was  not  infrequent,  too,  that  those 
who  qualified  were  inexperienced,  inefficient,  or  corrupt.^  De- 
spite these  difficulties,  however,  receipts  from  taxes  before  1870 
were,  proportionately  to  the  rate  and  the  total  assessments, 
more  satisfactory  than  after  1870.  This  better  showing  was 
due,  in  the  first  place,  to  the  more  rigid  collection  under  the 
military  authorities,  and,  in  the  second  place,  to  less  burden- 
some rates.^  A  number  of  circumstances  contributed  to  the 
disarrangement  of  the  tax  system  during  this  period.  With 
the  emancipation  of  the  slaves,  who  were  assessed  for  taxation 
in  1865  at  $137,191,886,  taxable  property  to  that  amount  was 
wiped  out.  Slaves  in  1865  constituted  38  per  cent  of  the  taxable 
property.  The  escape  and  undervaluation  of  real  estate  was 
favored  by  the  provision  of  the  laws  which  permitted  its  ren- 
dition either  in  the  county  of  its  situs  or  in  the  county  of  resi- 
dence of  the  owner   or   agent.     Furthermore,   because   of  the 


^Report  of  the  Comptroller,  1868-9,  p.  4.  In  1870  defaulting  and 
delinquent  officers  were  due  the  state  $350,000;   ibid.,  1870,  p.  20. 

-The  United  States  Census  of  1870  gave  as  the  assessed  value  of 
property  $149,732,929  and  as  the  true  value  $159,052,542.  The  per  cent 
of  assessed  to  the  true  value  was  87,  which  is  a  high  proportion.  Vol. 
Industry  and  Wealth,  p.  10. 


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UM  19  1917 


BULLETIN 

OF  THE 

UNIVERSITY  OF  [TEXAS 

1916:  No.  37 


\r, 


JULY  1 


1916 


A  FINANCIAL  HISTORY  OF  TEXAS 


BY 

Edmund  Thornton  Miller 

Adjunct  Professor  of  Economics  in  the 

University  of  Texas 


I  ' 


Published  bj  the  University  six  times  a  month  and  entered  ag 

secora-class  matter  at  the  postoflSce  at 

AUSTIN,  TEXAS 


Publications  of  the  University  of  Texas 


Publications  Committee : 

A.  C.  JuDSON  C.  Hartman 

E.  C.  Barker  J.  L.  Henderson 

J.  M.  Bryant  W.  S.  Hunter 

G.  C.  Butte  J.  A.  Lomax 

R.  H.  Griffith 


The  University  publishes  bulletins  six  times  a  month.  These 
comprise  the  official  publications  of  the  University,  publica- 
tions on  humanistic  and  scientific  subjects,  bulletins  prepared 
by  the  Department  of  Extension  and  by  the  Bureau  of  Munic- 
ipjil  Research,  and  other  bulletins  of  general  educational  in- 
terest. With  the  exception  of  special  numbers,  any  bulletin  will 
he  sent  to  a  citizen  of  Texas  free  on  request.  All  commxinica- 
tions  about  University  publications  should  be  addressed  to  the 
Editor  of  University  Publications,  University  of  Texas,  Austin. 


A,  C.  BALDWIN  &  SONS:   AUSTW 


B290-616-12lt 


BULLETIN 

OF  THE 

UNIVERSITY  OF  TEXAS 

1916:  No.  37 


JULY  1 


1916^ 


A  FINANCIAL  HISTORY  OF  TEXAS 


BY 

Edmund  Thornton  Miller 

Adjunct  Professor  of  Economics  in  the 
University  of  Texas 


Published  by  the  University  six  times  a  month  and  entered 
second-class  matter  at  the  postofRce  at 
AUSTIN,  TEXAS 


The  benefits  of  education  and  of 
useful  knowledge,  generally  diffused 
through  a  community,  are  essential 
to  the  preservation  of  a  free  govei*n- 
ment. 

Sam  Houston. 


Cultivated  mind  is  the  guardian 
genius  of  democracy.  .  .  .  It  is 
the  only  dictator  that  fi-cemen  ac- 
knowledge and  tJie  only  security  that 
freemen  desire. 

President  Mirabeau  B.  X^amar. 


PREFACE. 

The  iijcreasing  number  of  histories  of  Texas  and  of  books 
about  Texas  testify  to  thq  appeal  which  the  history  of  the  state 
has  alike  to  its  sons  and  daughters  and  to  those  who  are  foreign 
to  its  soil.  Texas  has  been  under  the  flags  of  Franco,  Spain, 
Mexico,  the  Republic  of  Texas,  the  Confederate  States  of  Amer- 
ica and  the  United  States,  and  the  scroll  which  records  these 
changing  fortunes  has  attracted  the  novelist,  the  political  his- 
torian, the  student  of  imperialism  and  of  colonizing  movements, 
and  finally  the  economic  and  financial  historian.  Just  as  its 
political  history  is  the  most  fascinating  of  any  of  the  American 
states,  so  its  financial  history  is  varied,  frequently  spectacular, 
usually  interesting,  and  alw^ays  illustrative  of  either  the  prin- 
ciples or  the  fallacies  of  public  finance. 

William  Gouge  published  in  1852  his  Fiscal  History  of  Texas, 
but  outside  of  his  book  the  finances  of  the  state  have  had  no 
historian  until  the  present  writer  undertook  the  task.  The  sug- 
gestion of  the  undertaking  came  from  the  Carnegie  Institution, 
and  the  author  is  under  grateful  obligations  to  it  for  material 
assistance. 

The  chief  difficulty  met  with  in  the  work  has  been  the  com- 
plete absence  of  financial  reports  for  some  years  and  the  many 
imperfections  in  the  reports  extant.  Too  often  do  the  reports 
of  the  state's  financial  officials  seem  to  have  been  gotten  out  in 
a  perfunctory  way  and  merely  to  meet  the  minimum  require- 
ments of  the  law,  and  the  author  is  convinced  that  a  decided 
reform  must  occur  if  the  reports'  are  to  fulfill  their  purpose 
of  presenting  to  the  average  citizen  an  intelligible  conception 
of  the  financial  operations  of  the  state  government.  The  tax 
system  of  the  state  is  and  always  has  been  defective  and  is 
sorely  in  need  of  change  if  the  most  elementary  justice  is  to  be 
done  among  men.  If  this  financial  history  can  arouse  any  in- 
terest in  the  state's  fiscal  problems,  or  if  it  can  be  of  any  use  to 
those  who  are  already  interested  in  these  problems,  the  writing 
of  the  book  will  be  justified. 

The  chapters  dealing  with  the  Civil  War  and  the  Recon- 
struction were  *■  st  published  in  the  Quarterly  of  the  Texas 
Ci 


iv  Bulletin  of  the  University  of  Texas 

State  Historical  Association^  and  are  included  here  in  a  some- 
what modified  form. 

The  author  wishes  to  express  his  deep  appreciation  to  Pro- 
fessor Charles  J.  Bullock,  of  Harvard  University,  and  Pro- 
fessor Henry  B.  Gardner,  of  Brown  University,  for  many  val- 
uable suggestions.  He  also  gratefully  acknowledges  the  aid  of 
Emily  Maverick  ]\Iiller  in  reviewing  and  criticizing  the  manu- 
script before  publication. 

Edmund  Thornton  Milder. 
Austin,  Texas,  June,  1916. 


Chapter     1. 
Chapter     2. 


Chapter     1. 
Chapter     2. 


Chapter     3. 


Chapter  1. 

Chapter  2. 

Chapter  3. 

Chapter  4. 


Chapter     5. 


TABLE  OF  CONTENTS 

PART    I  PAGE 

The    Spanish-Mexican   Period 9 

The    Revolution    13 

PART  II 

The  Republic,  1836-1846 

Expenditures .  .  .  18 

Receipts    28 

A.  The  tariff  28 

B.  Tonnage  dues  and  port  fees 35 

C.  The  property  tax 36 

D.  Business  taxes  43 

E.  The  poll  tax 45 

P.     The  characteristics  and  the  operation  of 

the   system   of   property   and  business 

taxes    45 

Ct.     Land  and  land  dues 51 

11.     Miscellaneous  and  unclassified  receipts.  .  56 

I.       Character  of  receipts 56 

J.      Local  taxes    57 

The  Public  Debt ' 59 

A.  Ten  per  cent  bonds  of  the  five  million 

dollar   loan    acts 59 

B.  Audited  drafts  and  audited  claims.  .....  64 

C.  Treasury   notes    67 

D.  Eio'ht  per  cent  treasury  bonds 78 

E.  Ten  per  cent  bonds  of  June  7,  1837 79 

F.  Eight  and  ten  per  cent,  bonds  of  Feb- 

ruary 5,  1840 80 

G.  Miscellaneous  debts    81 

H.     Recapitulation   and  summary 81 

PART  HI 

The  State,  1846-1861 

Introduction    83 

Expenditures   , Sd 

The   School  Funds 94 

Receipts    99 

A.  The  property  tax 99 

B.  Business  taxes  Ill 

C.  The  poll  tax 113 

D.  Receipts   from  other  sources 114 

The  Public  Debt 117 


viii  Contents 

PAGE 

B.  Lands  of  the  public  free  school  fund.  . .  .   329 

a.  Agricultural   lands    329 

b.  Timber  lands  and  timber 342 

c.  Mineral  lands  and  minerals 345 

d.  Summarj^ 350 

C.  University  lands   352 

D.  Asylum  lands    353 

E.  Conclusion    354 

Chapter  14.     The   Public  Debt    355 

Chapter  15.     Public   Education    361 

A.  The  permanent  school  fund 3G1 

B.  The  available  school  fund 367 

C.  The  University  of  Texas 372 

D.  The  Agricultural  and  ^Mechanical  Collesre  376 

E.  Other  higher  educational  institutions.  . .  .  377 

F.  A  special  tax 378 

Chapter  16.     Financial  Administration    379 

Chapter  17.     Conclusion    385 

PART  VIII 
Appendix 

Table     1.     Revenues  of  the  Republic 391 

Table     2.     Expenditures  of  the  Repul^lic 391 

Table     3.     Classified  Appropriations  of  the  Republic 391 

Table     4.     Public  Debt  of  the  Republic 391 

Table     5.     Treasury  Note  Circulation 391 

Table     6.     Retail   Prices    394 

Table     7.     Classification  of  Warrants  Drawn  on  the  General 

Revenue  Fund,  1848-1915 395 

Table     8.     Expenditures  for  Higher  Education 399 

Table     9.     Net  Expenditures,  1847-1915 403 

Table  10.     Classified  Net  Receipts,  1847-1915 405 

Table  11.     Classified  Taxes,  1846-1915 409 

Table  12.     Tax   Rates,    1846-1915 412 

Table  13.     Assessed  Values  of  Property,  1846-1915 413 

Table  14.     General  Revenue  Fund,  1847-1915 416 

Table  15.     Available  School  Fund,  1847-1915 420 

Table  16.     Cost  and   Loss  in   Assessment   and    Collection, 

1886-1915    324 

Table  17.     Public  Debt,  18.46-1915 426 

Table  18.     Ownership  of  the  State's  Bonded  Debt,   1865- 

1915    428 

Table  19.     For  Table  of  Confederate  Currency  Values...  429 

Bibliography    431 

Index    435 


PART  I.. 

Chapter  1. 

the  spanish-mexican  period. 

On  January  l'^  1821,  when  ]Moses  Austin  was  given  permis- 
sion by  the  Spanish  authorities  to  introduce  three  hundred  fami- 
lies into  Texas,  that  Spanish  colonial  possession  was  a  wilderness 
except  for  roving  ,Indian  tribes,  some  monastic  'settlements, 
Spanish  soldiers,  and  a  few  American  squatters.^  Austin  died 
soon  after  the  favorable  answer  to  his  petition,  and  the  work 
of  carrying  out  the  enterprise  fell  to  his  son,  Stephen  F.  Aus- 
tin.- Shortly  after  the  latter 's  arrival  in  Texas  in  1822,  he 
was  told  by  the  Spanish  governor  at  Bexar  of  the  Mexican  revolu- 
tion,- and  was  advised  to  go  to  Mexico  and  get  the  concession 
confirmed.  Austin  had  no  sooner  arrived  in  Mexico  than  an- 
other  change  in  government  occurred,  by  which  Don  Augustin 
Iturbide  made  himself  emperor.  A  colonization  law  was  en- 
acted January  24,  1823,  and  on  February  18,  1823,  the  em- 
peror affirmed  by  decree  Austin's  grant.  A  revolution  soon 
overthrew  Iturbide,  however,  and  it  devolved  upon  Austin  to 
secure  from  the  newly  established  federal  government  a  con- 
firmation of  his  concession.  This  was  obtained  April  14,  1823, 
and  Austin  then  returned  to  Texas  to  organize  his  colony.  Other 
empresarios  also  obtained  grants  conformable^  to  the  coloniza- 
tion laws,  and  the  influx  of  Americans  into  Texas  began.^ 

Texas  and  Coahuila  were  one  state  in  the  Mexican  federal 
system,  and  a  state  constitution  was  adopted  March  11,  1827. 
This  constitution  remained  in  effect  until  March  2,  1836,  when 
the  Texans  declared  their  independence  of  Mexico. 


^In  1820  the  estimated  population,  exclusive  of  Indians,  was  4,000; 
Garrison,  Texas,  p.  124. 

-Stephen  F.  Austin's  account  of  the  beginnings  of  this  colony  is 
reprinted  in  Gammel,  Laws  of  Texas,  Vol.  I.  See  also  Wpoten,  A 
Comprehensive  History  of  Texas,  vol.   I,  pp.  439-493. 

^An  estimate  of  the  population  in  1827  is  10,000  exclusive  of  Indians; 
Garrison,   Texas,  p.  156. 


10  Biilletm  of  .iJi:iB\Umv\i^^^/Qf:  texas 

The  finances  and  fijianfei-ai  V«^J[^itt^j^is  qf  this  period  of 
Texas  history  are  very  obscure.^ 

It  appears  from  the  laws  and  decrees  that  the  revenue  came 
from  tithes,-  excise,^  stamp,*  and  customs  duties;^  and  from 
taxes  on  income®  and  on  the  export  of  coin  and  silver  bullion/ 
Other  sources  were  the  sale  of  the  right  of  cock  pit  locations,'' 
the  monopoly  of  the  sale  of  tobacco,"  and  taxes  on  billiard  ta- 
bles,^^  on  the  slaughtering  of  stock,^^  and  the  capturing  of  mus- 
tangs and  wild  cattle.^-  Forced  loans  also  were  employed  on 
occasions.^^ 

From  most  of  these  taxes  the  new  American  settlements  were 
exempt  for  a  period  of  from  six  to  ten  years.^*  Exemption  from 
certain  taxes  was  given  subsequently  to  the  Spanish  settlements 


^The  Mexican  archives  in  the  City  of  Mexico  and  the  Bexar  archives 
at  the  University  of  Texas  may  when  investigated  throw  light  on  the 
period.  In  the  meantime,  as  one  writer  has  said,  "one  is  puzzled  to 
know  whence  came  the  revenues  of  Texas  while  a  part  of  the  Mexican 
confederacy";  E.  C.  Barker,  "The  Finances  of  the  Texas  Revolution,' 
in  the  Political  Science  Quarterly,  vol.  19,  p.  612. 

^Decree  No.  34;  Gammel,  op.  cit.,  vol.  1,  p.  200.  Decree  No.  238; 
ibid.,  p.  332. 

^Decree  No.  14;  ibid.,  p.  124.  Decree  No.  85;  ibid.,  p.  228.  Decree 
No.  107;  ibid.,  p.  247.      Decree  No.  202;  ibid,,  p.  310. 

^Decree   No.  11;    ibid.,   p.   120. 

''Decree  No.   94;    ibid.,   p.   241. 

•Decree  No.  90;   ibid.,  p.  233. 

^Decree  No.  79;   ibid.,  p.  224.     Decree  No.  209;   ibid.,  p.  313. 

"Decree  No.  2;   ibid.,  p.  173. 

^Decree  No.  15;    ibid.,  p.  124. 

'"Decree  No.  2;    ibid.,  p.  173.     Decree  No.  169;   ibid.,  p.  286. 

"Decree  No.  279;   ibid.,  p.  381. 

"Decree  No.   8;   ibid.,  p.  178. 

'^Decree  No.  105;  ibid.,  p.  245.  Decree  No.  171;  ibid.,  p.  288.  Decree 
No.  305;  ibid.,  p.  404. 

"Colonization  law  of  1823,  articles  24  and  25;  Gammel,  op.  cit.,  voL 
1,  p.  30.  This  law  controlled  Austin's  colony,  and  provided  for  an 
exemption  for  six  years.  The  colonization  law  of  March  24,  1825,  and 
the  decree  of  February  9,  1828.  governed  the  other  colonies,  and  pro- 
vided for  an  exemption  for  ten  years;    ibid.,  pp.  130,  207. 


A  Fiimncml  History  of  Texas  11 

also,  on  the  ground  that  the  dutiable  articles  were  necessities, 
or  that  the  taxes  would  burden  agriculture.^ 

No  mention  is  made  in  the  laws  and  decrees  of  a  direct  tax 
on  land.  Land  dues,  however,  were  probably  an  important 
source  of  revenue.  The  state  colonization  law  provided  that 
new  settlers  should  pay  as  dues  to  the  state  $30  for  each  sitio 
of  pasture  land,  $3.50  for  each  irrigable  labor,  and  $2.50  for 
each  non-irrigable  laborr 

AU  the  colonists  were  required  to  pay  land  dues,  and  were 
subject  also  to  stamp  taxes  on  legal  documents  giving  title  to 
property.''  The  tobacco  monopoly  was  in  force  throughout  all 
the  colonies.  Six  years  after  its  beginning,  customs  duties  be- 
came applicable  to  Austin's  colony  and  were  immediately  applied. 
They  irritated  the  colonists,  as  is  shown  by  the  friction  in 
1830  at  Anahuac  between  the  citizens  and  the  customs'  officials, 
and  by  the  petition  to  the  General  Congress  from  the  convention 
which  met  at  San  Felipe  de  Austin,  October  1,  1830.*  This 
petition  represented  that  the  tariff  then  in  effect  was  so  high 
as  to  be  equivalent  to  a  total  prohibition,  and  it  asked  for  the 
privilege  of  introducing  free  of  duty  for  three  years  indis- 
pensable articles,  such  as  provisions,  farming  implements,  tools, 
cotton  bagging,  household  and  kitchen  furniture,  clothing,  shoes, 
hats,  powder  and  shot.^ 

There  is  much  obscurity  also  as  to  what  were  the  fiscal  ma- 
chinery and  methods  employed  during  this  period.  The  col- 
lection of  stamp  taxes  was  in  Austin's  colony  in  the  hands  of 
Austin  himself,  and  returns  were  made  by  him  to  the  commis- 
sioner   appointed   by    the   governor    of   the    state. ^     After   the 


^Maize,  beans,  and  pepper  were  exempt  from  excise  duties.  Decree 
No.  14;  Gammel,  op.  cit.,  vol.  1,  p.  186.  Raw  cotton,  horses,  cattle, 
and  smaller  stock,  and  sugar  plantations,  vineyards,  and  the  products 
thereof  were  exempt  for  twelve  years.  Decrees  Nos.  176  and  298; 
Gammel,  op.  cit.,  vol.  1,  pp.  291,  396. 

^Article  22;  Gammel,  op.  cit.,  vol.  1,  p.  43.  A  lahor  was  about  200 
acres,  a  sitio  abouf  4,400  acres. 

'Decree  No.  43;  Gammel,  op.  cit.,  vol.  1,  p.  207. 

"Edna  Rowe,  "The  Disturbances  at  Anahuac  in  1832,"  in  The  Quar- 
terly of  the  Texas  State  Historical  Association,  vol.  6,  pp.  265-299.  Also 
Garrison,  Texas,  p.  176. 

^Proceedings  of  the  Convention;  Gammel,  op.  cit.,  vol.  1,  p.  485. 

•Ibid.,  p.  18. 


12  Bulletin  of  the  University  of  Texas 

organizatiou  of  an  ayuntamiento,  or  elective  town  coiuicil,  in 
this  and  the  other  colonies,  this  body  performed  in  connection 
with  its  other  duties  those  of  a  fiscal  character.^ 

There  were  excise  agencies  in  the  departments,  and  receivers' 
offices  in  the  municipalities.  The  excise  agent  in  some  cases  sold 
the  tobacco  and  stamped  paper.^  These  agents  and  the  receivers 
of  the  customs  were  appointed  by  the  governor.  Returns  were 
made  by  them  to  the  state  treasurer^  who,  in  turn,  made  his 
report  to  the  governor ;  and  the  governor,  in  turn,  communicated 
it  to  congress.  This  body  fixed  the  amount  of  taxes  to  be  raised, 
according  to  the  estimate  of  the  expenditures  presented  by  the 
governor.^ 

The  revenue  during  this  period  w^as  inadequate  to  meet  the 
wants  of  the  state  government.  Complaints  are  frequent  in  the 
laws  and  decrees  of  the  "reduced  state  of  the  treasury,"  and 
offices  were  discontinued  from  time  to  time  owing  to  the  insuffi- 
ciency of  public  means.* 

The  period  is  not  important  for  any  influence  exerted  upon 
subsequent  periods.  The  fiscal  organization  was  of  a  character 
foreign  to  the  Americans,  and  was  not  continued  by  them  when 
control  passed  into  their  hands.  It  could  not  be  employed  dur- 
ing the  Revolution,  and  new  expedients  for  raising  revenue  had 
to  be  found.  The  revenue  from  taxes  must  have  been  inconsid- 
erable during  this  period,  in  view  of  the  exemptions  granted. 
Except  for  the  years  when  the  tariff  was  in  effect  taxation  could 
not  have  been  very  burdensome,  and  there  is  little  evidence  that 
it  was  one  of  the  causes  of  the  Revolution.'^ 


^Article  23   of  the  colonization  law  of  1825;    ibid.,  p.  102. 

^Decree  No.  132;   ibid.,  p.  259. 

^^Decree  No.  11;    ibid.,  p.  184. 

^Decree  No.  50;  ibid.,  p.  211.  Decree  No.  144;  ibid.,  p.  266. 
'""Burnet,  who  was  president  ad  interim,  said  in  a  message  of  October  4, 
1836,  "the  experience  pf  the  nation  from  which  we  have  descended 
affords  abundant  testimony  of  the  pernicious  consequences  of  an  over- 
charged tariff";  House  Journal,  1st  Tex.  Cong.,  First  Session,  p.  15. 
This  statement  and  the  ])etition  of  the  general  convention  which 
met  at  San  Felipe  de  Austin  throw  light  on  the  character  of  the  Mexican 
tariff.  Although  the  tariff  was  not  singled  out  for  indictment  at  the 
time  independence  was  declared,  there  is  little  doubt  but  that  it  was 
obnoxious  enough  to  have  exerted  some  influence 

See  for  a  general  account  of  this  period  Barker,  Potts,  and  Ramsdell, 
A  School  History  of  Texas,  ch.  5. 


Chapter  2. 
the  revolution. 

From  October  11,  1835,  the  date  of  the  formation  of  the 
Permanent  Council,  to  October  22,  1836,  when  the  permanent 
government  of  the  Republic  of  Texas  was  inaugurated,  govern- 
mental functions  were  performed  by  five  different  bodies:  (1) 
The  Permanent  Council,  October  11,  1835,  to  November  1,  1835 ; 
(2)  the  Consultation,  November  1  to  November  14,  1835,  which 
body  organized  a  provisional  government  whose  organ  was  (3) 
the  General  Council,  Avhich  acted  from  November  14,  1835,  to 
March  1,  1836 ;  (4)  the  General  Convention,  March  1  to  March 
17,  1836,  which  put  forth  the  declaration  of  Texas  independence, 
framed  and  adopted  a  constitution,  and  provided  a  government 
ad  interim;  and  (5)  the  government  ad  interim^  which  was  es- 
tablished on  March  16,  1836,  and  exercised  authority  until  Oc- 
tober 22,  1836.  when  General  Sam  Houston,  the  duly  elected 
president  of  the  republic,  wa^  installed. 

The  separation  from  Mexico  was  begun  under  the  Permanent 
Council.  This  body  was  without  resources,  and  its  financial  opera- 
tions were  insignificant.^  Receipts  under  it  amounted  to  $374.30, 
of  which  $316  was  from  loans  and  $58.30  from  land  dues.^  The 
entire  amount  was  expended  on  the  army. 

The  receipts  under  the  Consultation  were  larger  on  account 
of  donations  received.  The  agent  at  New  Orleans  reported  sub- 
scriptions amounting  to  $7,000 ;  and  other  donations  aggregating 
$3,200  were  made.^  A  loan  of  $500  was  also  contracted  with 
Thomas  F.  McKinney,  a  member  of  the  Consultation  body.* 

Upon  the  establishment  of  the  provisional  government,  an 
organization  of  the  finances  was  attempted.     A  treasurer  was 


^The  Journal  of  the  Permanent  Council  is  printed  in  the  Quarterly 
of  the  Texas  State  Historical  Association,  vol.  17,  pp.  252-78. 

-Journal  of  the  Consultation,  in  Gammel,  op.  cit.,  vol.  1,  p.  513.  Bark- 
er, in  Pol.  Sci.  Quart.,  vol.  19,  p.  614. 

'Journal  of  the  Consultation  in  Gammel,  op.  cit.,  vol.  1,  p.  524.  Bark- 
er, in  Pol.  Sci.  Quart.,  vol.   19,  p.  622. 

^Journal  of  the  Consultation,  in  Gammel,  op.  cit.,  vol.  1,  p.  521. 


14  Bulletin  of  the  University  of  Texas 

appointed  and  his  duties  defined.^  The  offices  of  auditor  and 
comptroller  were  also  created,  and  it  was  made  the  duty  of  Ihese 
officers  to  audit  all  claims,  and  to  draw^  drafts  on  the  treasurer, 
the  auditor  signing,  the  comptroller  countersigning  them.- 

The  main  resource  of  Texas  in  her  struggle  for  inde]iendence 
was  her  public  lands.  These  she  offered  to  all  who  would  engage 
in  her  service,  and  upon  them  she  based  the  use  of  her  public 
credit.  The  General  Council  in  November  and  December,  1835, 
granted  a  bounty  of  640  acres,  later  increased  to  800  acres,  to 
each  private  and  non-commissioned  officer  in  the  regular  army, 
and  volunteers  were  rewarded  according  to  the  length  of  their 
service.^  But  land  was  a  drug  on  the  market,  and  had  to  be 
supplemented  by  other  means  of  getting  revenue. 

The  need  of  immediate  funds  made  the  resort  to  direct  taxes 
impracticable,  so  customs — or  import — and  tonnage  duties  were 
used  instead.*  On  December  12,  1835,  a  customs  duty  of  20 
per  cent  was  levied  upon  goods  entitled  to  a  drawback  in  the 
port  from  which  they  were  shipped,  and  10  per  cent  upon  goods 
not  so  entitled.  Goods  brought  by  immigrants  for  their  own 
use  were  exempt.^  A  supplementary  ordinance  of  December  15, 
1835,  imposed  a  tonnage  duty  of  $1.25,  and  a  specific  duty  of 
121/2  cents  a  gallon  on  whiskey,  American  gin,  rum,  and  brandy.*' 
On  December  27,  1835,  another  law  was  passed  which  levied 
25  per  cent  and  15  per  cent  duties  respectively  upon  goods  en- 
titled and  goods  not  entitled  to  drawbacks,  left  the  specific  and 
tonnage  duties  unchanged,  and  put  bacon,  pork,  breadstuffs 
and  lumber  for  building  on  the  free  list.'^  This  early  revision 
of  the  customs  law  was  done  primarily  to  safeguard  the  col- 


^Ordinances  and  Decrees,  in  Gammel,  op.  cit.,  vol.  1,  p.  928. 

==Ibid.,  p.  1003. 

nbid.,  pp.   926,   952,   991. 

*The  committee  on  finance,  reporting  November  27,  1835,  rejected 
dependence  on  the  sale  of  public  land  and  the  taxation  of  land  because 
they  required  too  much  time  to  get  into  operation.  It  recommended 
customs  and  tonnage  duties,  an  export  duty  on  cotton,  and  a  direct 
tax  on  each  slave;  Proceedings  of  the  General  Council  in  Gammel,  op. 
cit.,  vol.  1,   594. 

''Gammel,  op.  cit.,  vol.  1,  pp.  983-9. 

«Ibid.,  p.  990. 

'Ibid.,  pp.   1008-17. 


A  Financial  History  of  Texas  15 

lection  of  duties  by  requiring  larger  bonds  from  collectors  and 
to  prevent  the  delay  in  payment  of  duties  permitted  by  the 
first  act.^  The  amount  derived  from  these  duties  is  unknown. 
It  must  have  been  small  however,  for  the  acts  were  anticipated  by 
the  merchants.-  An  incomplete  report  of  the  collector  for  the 
department  of  Brazos  shows  receipts  up  to  July  31,  1836,  of 
only  $797.62.  Furthermore,  the  Convention  decided  March  12, 
1836,  that  the  provisional  government  had  exceeded  its  authority 
in  levying  customs  duties,  declared  the  acts  null  and  void,  and 
resolved  to  refund  the  amounts  paid.^ 

Stamp  duties,  land  dues,  and  the  sale  of  public  property 
were  also  sources  of  a  small  revenue.*  But  these,  as  were  the 
taxes,  were  received  to  an  undetermined  amount  in  the  form 
of  audited  drafts. 

A  more  important  source  of  ready  means  was  donations  from 
sympathetic  friends  in  the  United  States  and  from  Texans. 
These  amounted  to  about  $25,000  in  money  and  in  goods,  and 
were  usually  used  in  the  place  where  they  were  given  in  the 
purchase  of  munitions  of  war  and  in  the  equipment  of  volunteers. 

The  most  important  source  of  available  funds,  however,  was 
loans.^  An  ordinance  and  decree  of  December  5,  1835,  author- 
ized a  loan  of  $1,000,000  and  provided  for  three  commissioners 
who  should  seek  to  negotiate  it  in  the  United  States.  The  com- 
missioners appointed  were  Stephen  F.  Austin,  Branch  T.  Archer, 
and  William  H.  Wharton.  Either  in  a  body  or  individually  they 
visited  New  Orleans,  Nashville,  Louisville,  Washington,  Phila- 


'Proceedings  of  the  General  Council,  December  19,  1835,  in  Gammel, 
op.  cit,  vol.  1,  p.  683. 

^Proceedings  of  the  General  Council,  January  4,  1836;    ibid.,  p.   734. 

^Proceedings  of  the  Convention,  in  Gammel,  op.  cit.,  vol.   1,  p.  886. 

'The  committee  of  the  General  Council  reported  in  November  27, 
1835,  that  $1,678.77  had  been  received  from  land  dues,  and  $250  from 
the  sale  of  stamped  paper.  From  the  sale  jOf  supplies  captured  in 
December,  1835,  $1,271.99  was  received  in  the  form  of  promissory 
notes;   Barker,  in  Pol.  Sci.  Quart.,  vol.  19,  pp.  625-6. 

^In  their  report  on  November  27,  1835,  the  committee  on  finance 
said:  "Your  committee  have  not  been  able  to  fix  upon  a  project  possess- 
ing in  greater  degree  all  the  essential  requisites  of  speedy  operation, 
and  combining  celerity  and  certainty  in  its  accomplishment,  than  that 
suggested  by  a  loan";  Proceedings  of  the  General  Council,  in  Gam- 
mel, op.  cit.,  vol.  1,  596. 


16  Bulletin  of  the  University  of  Texas 

delphia,  New  York,  and  Richmond  in  their  efforts  to  place  thi; 
loan.^  The  bonds  were  to  be  of  the  denomination  of  $1000,  to 
bear  interest  not  exceeding  10  per  cent,  and  to  be  redeemable  in 
not  less  than  five  years  nor  more  than  ten  years.-  On  the  basis 
of  this  law  two  loans  aggregating  $250,000  were  made  in  Ne\^. 
Orleans  in  January,  1836.  They  were  both  subscribed  by  syndi- 
cates. The  first,  known  as  the  Triplett  Loan,  was  for  $200,000, 
ten  per  cent  of  which  was  paid  down.  The  second,  known  as 
the  Erwin  Loan,  was  for  $50,000,  and,  according  to  Gouge, 
$45,802  of  it  was  received.^  Although  nominally  loans,  these 
w^ere  really  contracts  for  the  purchase  of  land.  According  to  the 
terms  granted  by  the  commissioners,  should  the  subscribers  elect 
to  take  land  in  payment,  they  were  to  have  priority  in  its  loca- 
tion over  all  grants  made  after  the  date  of  the  loan.  Such  oppo- 
sition was  manifested  against  this  privilege  of  priority,  on  the 
ground  that  it  was  unjust  to  the  soldiers  and  others  in  the  actual 
service,  that  the  government  refused  to  ratify  the  terms,  and  pro- 
posed to  refund  the  money.*  Compromise  was  attempted  and 
bickerings  followed,  but  the  matter  was  finally  adjusted  on  the 
basis  of  a  land  payment.^  These  two  loans,  with  several  smaller 
ones,  yielded,  it  is  estimated,  about  $100,000.^ 

Finally,  on  January  20,  1836,  the  issue  of  $150,000  of  treasury 
notes  was  authorized.  The  notes  w^ere  to  be  in  denominations  of 
from  $1  to  $1000,  were  receivable  in  payment  of  public  lands 
and  dues,  and  were  redeemable  with  any  money  in  the  treasury 
not  otherwise  appropriated."^     One  of  the  last  acts  also  of  the 


'Texas  Diplomatic  Correspondence,  vol.  1,  p.  111. 

^Garamel,  op.  cit.,  vol.  1,  p.  948.  Texas  Diplomatic  Correspondence, 
vol.  1,  pp.  51-52. 

^Fiscal  History  of  Texas,  p.  53.  Texas  Diplomatic  Correspondence, 
vol.  1,  pp.  55,  57. 

^President  Burnet's  message,  October  4,  1836. 

^Acts  of  June  3,  1837,  and  May  24,  1838;  Gammel,  op.  cit.,  vol.  1,  pp. 
1289,  1499. 

^Barker,  in   Pol.  Sci.  Quart.,  vol.   19,  p.   634. 

'Gammel,  op.  cit.,  vol.  1,  p.  1033.  This  ordinance  was  entitled  an 
•^Ordinance  and  decree  for  the  better  accommodation  of  the  claims 
against  the  government  of  Texas."  When  it  was  under  discussion  in 
the  General  Council  an  amendment  was  proposed  by  which  "all  per- 
sons should  be  obliged  or  bound"  to  take  the  notes.  On  the  vote  the 
Council  was  divided,  but  the  president  voted  in  the  negative  and  there- 


A  Financial  History  of  Texas  17 

Convention  was  to  respond  to  President  Burnet's  suggestion  to 
authorize  the  executive  to  issue  8%  treasury  notes  to  "an  amount 
adequate  to  the  exigencies  of  the  country.^  There  is  no  evidence^ 
however,  that  there  were  any  notes  issued  under  either  of  these 
acts. 

The  total  public  debt  on  August  26,  1836,  was  estimated  to  be 
$1,250,000.  This  amount  w^as  made  up  as  follows :  loans,  $100,- 
000;  army,  $412,000;  navy,  $112,000;  supplies,  $450,000;  civil 
and  contingent  expenses,  $118,000;  not  itemized,  $60,000.  It 
represents  the  small  cost  of  independence  which  was  handed  down 
to  the  permanent  government.^ 


^Proceedings  of  the  Convention;  Gammel,  op.  cit.,  vol.  1,  p.  903. 

^Letter  of  Morfit,  President  Andrew  Jackson's  agent  to  Texas,  to 
Secretary  Forsyth,  September  4,  1836,  in  House  Executive  Document, 
24th  Cong.  No.  35.  U.  S.  Doc.  635.  Barker,  in  Pol.  Sci.  Quart.,  vol. 
19,  p.  635. 

by  defeated  the  proposal  that  they  should  be  a  legal  tender.  Proceed- 
ings of  the  General  Council;  ibid.,  p.  748.  The  loan  commissioners, 
Austin,  Archer,  and  Wharton,  writing  from  Nashville,  Tenn.,  to  Gov- 
ernor Smith,  on  February  24,  1836,  recommended  the  issue  of  treasury 
notes;   Texas  Diplomatic  Correspondence,  vol  1,  pp.  71,  72. 


2— H 


PART   II. 

THE  REPUBLIC,  1836-1846.1 

Chapter  1. 

expenditures. 

The  convention  which  at  Washington,  on  the  Brazos,  declared 
independence,  also  established  a  government  ad  interim,  and,  on 
March  17,  1836,  adopted  a  constitution.  The  battle  of  San  Ja- 
cinto was  fought  on  April  21,  and  the  hero  of  that  decisive 
victory — General  Sam  Houston,  was  elected  by  the  people  the 
first  constitutional  president  of  the  Republic  of  Texas.  The 
First  Congress  convened  on  October  3,  and  Houston  was  in- 
augurated on  the  twenty-second.  On  February  16,  18-1:6,  Anson 
Jones,  the  last  president,  formally  pronounced  the  Republic 
of  Texas  to  be  no  more,  and  committed  the  i^^overnment  to  the 
hands  of  the  state  authorities. 

During  the  brief  ten  years  of  its  existence,  the  republic  had 
a  place  somewhere  in  the  background  of  the  family  of  nations. 
Patterned  after  the  United  States  Government,  it  had  a  president, 
vice-president,  a  cabinet,  a  congress,  and  an  army  and  navy. 
It  received  foreign  representatives,  and  had  its  own  abroad; 
levied  and  collected  customs  duties,  direct  and  license  taxes; 
possessed  and  administered  an  extensive  public  domain;  issued 
without  stint  paper  money,  and  incurred  a  public  debt  whose 
principal  and  accumulated  interest  at  the  date  of  settlement 
amounted  to  over  $12,000,000.  The  white  population  of  Texas 
was  probably  not  over  thirty  thousand  in  1836  and  about  one 
hundred  thousand  in  1846.-  It  was  not  a  timid  population  in 
any  of  its  governmental  undertakings. 


^This  period  has  been  most  fully  treated  by  W.  M.  Gouge  in  his 
Fiscal  History  of  Texas,  published  in  18.52.  The  statistics  presented 
by  him  are  the  most  complete  obtainable,  since  many  official  documents 
and  other  original  material  to  which  he  had  access  have  been  lost  in 
the  fires  which  have  twice  destroyed  the  State  Capitol.  Gouge  was 
attracted  too  much  by  what  would  allow  play  to  his  satire,  and  the 
result  is  that  his  book  is  not  a  judicious  account  of  his  subject.  See 
Yoakum,  History  of  Texas,  vol.  2,  pp.  219,  249,  334. 

-Barker,  Potts  and  Ramsdell,  A  School  History  of  Texas,  p.  166. 


A  Financial  History  of  Texas  19 

The  history  of  the  republic  is  a  chapter  of  difficulties  and  dis- 
appointments, and  the  ten  years  were  rich  in  governmental  ex- 
perience. There  were  few  financial  expedients  whir^h  were  nol 
resorted  to.  The  key  to  its  character  and  difficulties  is  to  'ue 
found  in  its  expenditures.  These  illustrate  the  functions  of  a 
frontier  government,  and  explain  the  adoption  of  disastrous 
expedients. 

Bordering  on  Mexico,  who  was  an  unsatisfied  foe,  and  having 
within  her  confines  Apaches,  Cherokees,  Comanches.  and  o^her 
warring  Indian  tribes  to  a  number  equal  almost  to  one -third  of 
the  white  settlers,  Texas  held  defence  to  be  of  paramount  im- 
portance. When  the  permanent  government  entered  upon  its 
duties,  the  army,  which  numbered  about  two  thousand  men,  was 
suffering  privation,  and  the  navy  consisted  of  only  one  large 
vessel.^  The  first  matter,  therefore,  considered  by  the  First 
Congress  was  the'  condition  of  these  agencies  of  the  national 
defence;  and  acts  were  immediately  passed  and  appropriations 
made  for  their  increase  and  maintenance.-  In  the  winter  of 
1836-7,  the  army  dwindled  to  about  seven  hundred  men,  and 
the  president  was  compelled  to  bind  himself  personally  in  order 
to  provide  them  with  provisions.^  Volunteers  from  the  United 
States  soon  restored  the  number  to  nearly  two  thousand,  but  in 
May,  1837,  three-fourths  of  the  soldiers  were  given  furloughs 
because  of  lack  of  means  to  pay  them,  and  because  the  president 
believed  that  a  Mexican  invasion  was  not  to  be  expected.*     Mili- 


^Message  of  Burnet,  October  4,  1836.  See  also  Report  of  Committee 
on  Naval  Affairs;  House  Journal,  1st  Tex.  Cong.,  p.  97. 

-Act  of  November  18,  1836,  for  the  increase  of  the  navy;  Gammel,  op. 
cit.,  vol.  1,  p.  1090.  Acts  of  December,  5,  December  20,  and  December 
22,  relating  to  the  military  establishment;  ibid.,  pp.  1113,  1223,  1285. 
The  general  appropriation  act  carried  $700,000  for  the  army  and  $150,- 
000  for  the  navy;    ibid.,  p.  1145. 

•Yoakum,  op.  cit.,  vol.  2,  p.  207. 

^President  Houston  in  a  message  of  June  6,  1837,  said  that  since  he 
had  come  into  office  only  $500  in  cash  had  come  into  the  treasury,  all 
of  which  he  had  disbursed  for  provisions  for  the  troops. 

The  soldiers  were  a  turbulent  body,  and  in  the  summer  of  1836  re- 
fused to  accept  General  Lamar  who  had  been  designated  by  the  gov- 
ernment as  their  commander.  This  act  of  insubordination  was  also 
a  consideration  in  the  granting  of  the  furloughs;  Garrison,  Texas, 
p.  232. 


20  Bulletin  of  the  University  of  Texas 

tary  expenditures  were  in  this  way  kept  down,  but  some  had  to 
be  incurred  to  keep  companies  of  rangers  in  the  field  to  repress 
the  frequent  Indian  depredations  during  1836,  1837,  and  1838. 

As  for  the  initial  civil  expenditures,  the  First  Congress  estab- 
lished a  civil  list  which  for  length  and  compensation  was  far  too 
imposing  and  expensive  for  a  pioneer  settlement  of  some  thirty 
thousand  Americans.  It  was  provided  that  the  president  should 
receive  an  annual  salary  of  $10,000  and  be  provided  with  a 
furnished  house  ;^  the  vice-president,  attorney  general,  and  the 
commissioner  of  the  general  land  office,  each  $3,000;  the  secre- 
taries of  state,  treasury,  war,  and  navy,  each  $3,500;  the  post- 
master-general, $2,000;  the  treasurer  and  auditor,  each  $2,500; 
the  chief  justice,  $5,000,  and  associate  and  district  judges,  $3,000 ; 
foreign  ministers,  $5,000,  and  secretaries  of  legations,  $2,000. 
Members  of  congress  received  $5  per  diem,  and  consuls  and  clerks 
were  paid  on  the  same  generous  scale.- 

The  first  general  appropriation  bill  carried  $150,000  for  civil 
purposes,  but  owing  to  the  failure  of  the  government's  foreign 
agents  to  sell  land  scrip  or  to  negotiate  a  loan,  public  officers  went 
without  their  salaries  during  the  first  year.^ 

About  November  1,  1837,  the  issue  of  treasury  notes  began,  and 
thereafter  there  was  no  lack  of  such  means  to  meet  appropriations. 
The  effect  of  the  issues  was  to  raise  prices  to  such  an  extent 
that  the  high  nominal  salaries  became  by  1839  insufficient  for  the 
support  of  those  who  received  them.* 

President  Houston's  first  administration  extended  from  Octo- 
ber, 1836.  to  December,  1838.  The  total  expenditures  from 
January  1,  1837,  to  September*  30,  1838,  the  close  of  the  fiscal 
year,  were  $1,777,363.  Civil  expenditures  for  the  nine  months 
ending  September  30,  1838,  were  $380,921,  and  expenditures  for 
the  army  and  navy  were  $430,570.^ 


^The  president's  house  in  Houston  was  a  log  cabin  of  two  rooms,  one 
of  which  had  a  puncheon  floor,  the  other  had  only  Mother  Earth.  In 
1839  the  seat  of  government  was  removed  to  Austin,  and  the  presi- 
dent's house  there  was  more  in  keeping  with   his  rank  and  salary. 

^Act  of  December  29,  1836;   Gammel,  op.  cit.,  vol.  1,  p.  1129. 

^Message   of  the   President,   June   6,  1837. 

"Message  of  the  President,  November  12,  1839. 

^This  includes  support  of  the  war  department,  appropriations  for  In- 
dians, and  $64,014  expended  by  executive  order.  Report  of  the  Secretary 
of  the  Treasury,  September  30,  1838. 


A  Financial  History  of  Texas 


21 


Until  the  issue  of  treasury  notes  in  the  fall  of  1837,  appro- 
priations were  met  by  audited  drafts  and  orders  upon  agents 
in  the  United  States  who  had  land  scrip  to  sell.  It  was  this 
poverty  of  the  treasury  during  the  larger  part  of  Houston's 
administration  that  was  mainly  responsible  for  keeping  down  ex- 
penditures, and  especially  those  of  a  military  and  naval .  char- 
acter/ 

The  administration  of  Mirabeau  Lamar,  Houston's  successor, 
extended  from  December,  1838,  to  December,  1841.  It  was 
marked  by  a  great  increase  in  expenditures  and  by  the  practical 
bankruptcy  of  the  republic.  Appropriations  for  civil  purposes 
leaped  from  $192,000  under  Houston's  last  congress  to  $550,000 
under  Lamar 's  first.  This  was  due  to  no  increase  in  existing  sala- 
ries, but  to  additional  departmental  clerks,  to  increased  con- 
tingent expenses,  to  the  requirements  of  the  postal  service  and  to 
the  removal  of  the  seat  of  government  from  Houston  to  Austin. 

Appropriations  for  the  army  and  navy  increased  from  $881,000 
by  the  Second  Congress,  to  $1,523,455  by  the  Third,  and  to 
$1,620,169  by  the  Fourth.  The  withdrawal  in  March,  1839,  of 
the  French  blockade  of  ^lexico  left  Mexico  free,  it  was  thought, 
to  make  an  invasion ;  and  though  the  continuance  of  the  factional 
fighting  in  that  country  favored  the  security  of  Texas,  the  Lamar 
administration  believed  in  strengthenings  the  army.^  In  1839 
additions  were  made  to  the  navy  also,  and  though  these  were 
paid  for  in  bonds,  the  manning  and  maintenance  of  the  ships 
called  for  large  expenditures  out  of  current  funds.^  Lamar's 
attitude  toward  the  Indians  was  a  hostile  one:  he  favored  their 
expulsion  or  extermination,  and  the  campaigns  in  pursuance  of 
this  policy  resulted  in  bloody  retaliations  by  the  Indians.* 


^The  fact  that  civil  expenditures  were  almost  equal  to  the  military 
and  naval  is  explained  by  the  large  demands  of  the  civil  list,  and  by 
the  weakness   of  the  military  and  naval  establishments. 

-Message  of  November  12,  1839. 

^Expenditures  for  naval  purposes  during  the  first  nine  months  of 
1839  were  nearly  $60,000,  and  it  was  estimated  that  half  a  million 
would  be  required  for  1840.  Report  of  the  Secretary  of  the  Treasury, 
November   8,   1839. 

,  "Message  of  November  12,  1839.  Yoakum,  History  of  Texas,  vol.  2,  p. 
271,  may  be  interpreted  as  defending  Lamar's  Indian  policy,  Houston's 
more  pacific  policy,  however,  appears  to  have  been  both  more  Success- 
ful and  less  costly. 


22  Bulletin  of  the  Vmversity  of  Texas 

The  highest  point  in  the  expenditures  of  the  republic  waa 
reached  in  1840,  when  the  amount  was  nearly  $2,175,000.  The 
means  of  payment  had  been  provided  by  the  act  of  December  29, 
1838,  which  authorized  the  issue  of  treasury  notes  without  limit. 
It  is  to  be  expected,  therefore,  that  the  year  of  largest  expendi- 
tures should  be  also  the  year  of  the  largest  outstanding  circulation 
of  treasury  notes.^ 

A  reaction  in  favor  of  retrenchment  set  in  immediately.  Pub- 
lic opinion,  as  voiced  by  the  newspapers  and  the  candidates  for 
congress,  ascribed  the  derangement  of  the  finances  to  extrava- 
gance.^ The  congress  elect,  the  Fifth,  began  the  work  of  retrench- 
ment by  lowering  salaries  and  abolishing  or  consolidating  offices. 
The  salary  of  the  chief  justice  was  decreased  from  $5,000  to 
$3,000.^  The  office  of  secretary  of  the  navy  was  abolished,  and 
its  duties  were  devolved  upon  the  secretary  of  war;  the  office 
of  postmaster-general  was  abolished,  and  its  duties  fell  to  the 
secretary  of  state.  Various  minor  offices  also  in  the  treasury, 
and  in  the  military  and  naval  departments  were  cut  off.*  The 
decrease  in  the  number  of  dignitaries  thus  effected  caused  the 
civil  list  of  the  republic  to  suffer  a  reduced  appearance,  but  it 
resulted  in  a  saving  of  about  $100,000  per  annum. ^  The  appro- 
priations of  the  Fifth  Congress  for  civil  purposes  amounted  to 
about  $450,000,  as  compared  with  $550,000  by  the  Third. 

The  chief  reduction  in  expenditures,  however,  took  place  in 
the  army  and  navy.  No  appropriation  was  made  for  the  reg- 
ular army,  and  the  president  was  required  to  put  out  of  com- 
mission the  vessels  of  the  navy.  The  appropriation  for  these 
branches  of  public  defense  amounted  to  only  $211,050,  as  com- 


'The  estimated  outstanding  circulation,  including  treasury  bonds,  on 
September  30,  1840,  was  $3,287,962. 

-Telegraph  and  Texas  Register,  December  16,  1840.  As  early  as 
January  19,  1839,  this  newspaper  employs  the  fiction  of  a  dialogue  be- 
tween a  merchant  and  a  farmer  to  advocate  economy.  The  merchant 
advocates  a  national  bank  as  the  means  of  restoring  the  solvency  of 
the  republic,  but  the  farmer  contends  that  the  legislators  should  awake 
from  their  "golden  dream  of  folly,"  and  study  retrenchment. 

^Act  of  December  5,  1840;  Gammel,  op.  cit.,  vol.  2,  p.  553. 

^Act  of  January  18,  1841;  ibid.,  p.  569. 

'^Farewell  address  of  the  Speaker  of  the  House;  House  Journal,  5th 
Tex.   Cong.,   p.    723. 


A  Financial  History  of  'Texas 


23 


pared  with  $1,581,369  appropriated  by  the  Fourth  Congress, 
The  will  of  congress  in  regard  to  a  reduction  in  military  and 
naval  expenditures  was  not  carried  out  fully  by  President  Lamar. 
He  did  not  deem  it  practicable  to  retire  the  navy,  and  his  ar- 
bitrary promotion  of  the  visionary  Sante  Fe  expedition  increased 
military  expenditures.  Lamar  had  as  early  as  1839  suggested 
the  expedition  to  congress,  but  that  body  refused  its  assent. 
The  president  then  had  it  undertaken  without  legislative  ap- 
proval. The  expedition  resulted  disastrously,  and  while  those 
who  engaged  in  it  paid  a  considerable  part  of  the  cost,  it  was 
a  source  of  some  expense  to  the  treasury.^ 

The  three  years  of  the  Lamar  administration  saw  an  increase 
in  treasury  notes  and  in  expenditures  that  was  unparalleled  in 
any  former  or  succeeding  administration.  The  debt  was  more 
than  tripled  and  the  paper  promises  of  the  government  became 
worth  only  twelve  cents  on  the  dollar.  The  republic  was  a 
virtual  bankrupt.  To  lead  them  out  of  the  financial  morass,  the 
people  turned  again  to  General  Sam  Houston.  Lamar's  policies: 
were  reversed,  and  the  retrenchment  initiated  by  the  Fifth  Con- 
gress w^as  carried  much  farther. 

The  Sixth  Congress,  or  the  first  under  Hjouston's  second  ad- 
ministration, has  been  called  the  ''Reform  Congress."  The  act 
of  December  11,  1841,  abolished  officers,  decreased  the  number 
of  clerks  employed  in  the  several  departments,  and  reduced  sal- 
aries from  that  of  the  president  down.^ 


^Yoakum,  op.  cit.,  vol.  2,  pp.  321-331,  gives  an  account  of  this  expedi- 
tion.    See  also  Garrison,   Texas,  pp.  244-6. 
'•^The  salaries,  as  fixed  by  this  act,  were  as  follows: 
President,   $5,000. 
Vice-president,   $1,000. 
Secretary  of  state,  $1,500. 
Secretary  of  treasury,    $1,500. 
Secretary  of  war  and  navy,  $1,500. 
Attorney    general,    $1,000. 

Commissioner  of  the  general  land  office,  $1,200. 
Treasurer,  $1,000. 
Comptroller,  $1,000. 

Chief  justice  and  district  judges,  $1,750. 
Chief  clerks,  $600. 
Assistant  clerks,  $500. 
Members  of  Congress,  $3  per  diem.     Gammel,  op.  cit.,  vol.  2,  p.  684, 


24  Bulletin  of  the  University  of  Texas 

The  zeal  of  congress  for  retrenchment  in  the  civil  list  ex- 
ceeded, however,  that  of  the  president.  In  his  message  of  De- 
cember 20,  1841,  Houston  said  that  the  time  when  retrenchment 
was  necessary  and  important  had  gone  by.^  He  meant  by  this, 
doubtless,  that  the  military  and  naval  policy  of  the  Lamar  ad- 
ministration should  never  have  been  entered  upon.  In  his 
message  of  June  27,  1842,  also,  he  complained  that  his  sugges- 
tions as  to  the  finances  had  not  been  enacted  at  the  preceding 
session,  and,  as  if  to  express  his  opinion  of  the  retrenchment  bill 
that  had  been  passed,  he  added  that  salaries  were  insufficient  and 
that  the  most  efficient  officers  of  the  government  were  resigning.^ 

The  reduction  in  salaries  was,  indeed,  extraordinary,  and,  in 
view  of  the  high  prices  prevailing  and  the  opportunities  for 
gain  outside  of  government  employment,  Houston  was  justified 
in  deprecating  the  action  of  congress.^  No  further  reduction 
was  recommended  either  in  or  out  of  congress,  but  the  discon- 
tinuance of  what  were  regarded  as  useless  officers,  such  as,  for 
example,  foreign  ministers,  charge  d'affaires,  and  secretaries  of 
legation,  was  advocated.* 

More  important  than  the  economies  worked  in  the  civil  list  were 
those  in  the  army  and  navy.  The  policy  of  Lamar  toward  the 
Indians  was,  as  has  been  stated,  one  of  extermination;  and  in 

^Executive  Record,  No.  40. 
-Executive  Record,  No.  40. 

'The  following  is  a  statement  of  salaries  paid  at  the  seat  of  govern- 
ment before  and  after  the  act  of  December  11,  1841: 

1840 $174,200 

1841 173,506 

1842 32,800 

Quoted  by  Yoakum,  op.  cit.,  vol.  2,  p.  321,  from  a  statement  of  the 
comptroller,  December  16,  1842.  The  reduction  here  shown  looks  al- 
most incredible,  but  the  figures  tally  closely  with  those  of  the  appropria- 
tion acts. 

*Th6  senate  committee  on  finance  believed  in  abolishing  the  for- 
eign missions  and  offices  of  secretary  of  the  treasury  and  secretary  of 
war  and  navy.  Senate  Journal,  7th  Tex.  Cong.,  p.  30.  The  Telegraph 
and  Texas  Register  of  January  3,  1844,  thought  the  work  of  economy 
was  not  completed  and  advocated  dispensing  with  "useless  foreign  rep- 
resentatives." These  recommendations  were  not  carried  out,  however, 
and  the  act  of  December  11,  1841,  remained  the  great  measure  of  re- 
trenchment of  civil  expenditures. 


A  Fhiancial  History  of  Texas  25 

regard  to  Mexico,  he  was  in  constant  expectation  of  the  renewal 
of  the  war.  Houston's  policy  toward  the  Indians  was  markedly 
different.  He  had  lived  among  them  and  understood  them,  and 
they  had  a  very  high  regard  for  him.  Treaties  were  made  with 
nearly  all  of  the  tribes,  and  a  regime  of  amity  was  established 
which  told  greatly  in  favor  of  decreased  Indian  expenditures/ 

The  failure  of  the  Fifth  Congress  to  make  any  appropriation 
for  the  regular  army  showed  how  little  the  legislators  feared  a 
renewal  of  hostilities  with  Mexico.  But,  as  a  matter  of  fact,  in 
March  and  September  of  1842  there  were  two  invasions,  and  San 
Antonio,  Refugio,  and  Goliad  were  occupied  by  the  enemy.  Fol- 
lowing the  invasion  in  March,  congress,  in  June,  declared  for  an 
offensive  war,  and  a  large  body  of  Texans  rushed  to  arms.  The 
invading  armies  withdrew  after  a  few  days'  occupation  of  the 
captured  towns,  and  the  failure  of  the  republic's  agents  to  effect 
a  loan  and  the  president's  veto  of  a  bill  appropriating  one  million 
acres  of  land  upon  which  land  scrip  should  be  based  and  sold, 
dispelled  the  war  cloud.  jMexico  besides  being  weak  on  account 
of  internal  dissensions  was  also,  like  Texas,  too  poor  to  engage 
in  a  war. 

The  expenditures  of  a  military  character  were,  after  1841, 
only  such  as  were  necessary  to  keep  a  few  companies  of  rangers 
in  the  field.  Expenditures  on  account  of  the  navy  diminished  to 
a  nominal  sum.  A  secret  act  was  passed  in  January,  1843,  to 
sell  the  vessels,  and  they  were  put  out  of  commission  at  once." 

The  economy  of  Houston's  second  administration  resulted  in 
total  expenditures  of  only  $511,083  for  the  three  years,  1842-44, 
as  compared  with  $4,855,215  for  the  preceding  three  years.  At 
the  beginning  of  his  term  President  Houston  found  the  financial 
condition  of  the  government  to  be  deplorable;  at  its  close,  he 

^The  following  statement  of  expenditures  on  account  of  the  Indians 
was  prepared  by  the  comptroller  in  1854: 

1837-1838    (Houston)     $    190,000 

1839-1841    (Lamar)     2,552,319 

1842-1844  (Houston)  94,092  • 

1845  (Jones)  45,000 

Yoakum,  op.  cit.,  vol.  2,  p.  341  n. 
^This  secret  act  was  repealed  February  5,  1844,  but  expenditures  were 

unaffected.     Gammel,  op.  cit.,  vol.  2,  p.  1027. 


26  Bulletin  of  the  University  of  Texas 

noted  that  the  finances  were  in  a  most  "healthy  and  prosperous 
condition."^ 

Viewing  the  entire  period  of  the  republic,  the  history  of  ex- 
penditures falls  into  two  well  defined  divisions,  one  of  which 
extends  from  1836  to  1841,  the  other  from  1841  to  1846.  Total 
expenditures  for  the  first  period  were  $7,128,873,  or  an  annual 
average  of  $1,879,978 ;  the  total  for  the  second  period  was  $736,- 
713,  or  an  annual  average  of  $184,178. 

The  functions  performed  by  the  government  were  confined  to 
the  administrative  and  protective.  Although  in  the  beginning 
the  general  governmental  framework  was  of  most  pretentious 
proportions,  it  was  gradually  modified  by  either  abolition  or  con- 
solidation of  ofijces  until  it  was  so  simple  as  to  be  almost  incon- 
sistent with  the  position  of  Texas  as  a  national  entity.  Civil 
expenditures  were  quite  exclusively  for  the  congress,  the  presi- 
dent and  his  cabinet,  and  the  judiciary.  One  will  look  in  vain 
for  appropriations  for  education,  the  care  of  the  defectives,  or 
internal  improvements.-  It  was  not  because  such  objects  of  ex- 
penditures were  unappreciated,  but  because  there  were  more 
pressing  needs.  In  the  case  of  education,  rich  provision  was 
made  by  appropriations  of  public  lands,  but  the  fruits  of  this 
endowment  did  not  materialize  during  the  life  of  the  republic. 

The  greatest  drain  upon  the  treasury,  and  the  chief  cause  of 
its  difficulties,  was  the  military  and  naval  expenditures.  The 
frontier  position  and  condition  of  the  state  caused  these  ex- 
penditures. Mexico  refused  to  recognize  the  independence  of 
Texas,  and  an  army  and  navy  were  deemed  necessary  to  repel  the 
expected  attempt  at  resubjugation.  Rangers  also  were  in  con- 
stant service  on  account  of  the  attacks  of  marauding  Mexicans 
and  of  hostile  Indians  upon  the  western  settlements.  It  is  true 
that  conditions  in  Mexico  were  throughout  the  period  such  as  to 
render  fanciful  the  fear  of  an  invading  army  strong  enough  to 


'See  Anonymous  (C.  E.  Lester),  The  Life  of  Sam  Houston,  p.  191, 
for  a  panegyric  account  of  Houston's  accomplishments  in  conducting 
the  government.  Also  Crane's  Life  and  Select  Literary  Remains  of 
Sam  Houston,  p.  157-165. 

^The  erection  of  a  penitentiary  was  provided  for  by  the  act  of  Jan- 
uary 4,  1842;  Gammel,  op.  cit.,  vol.  2,  p.  695.  On  February  3,  1845, 
an  appropriation  of  $9,000  was  made  for  the  erection  of  lighthouses 
on  Galveston  Island  and  at  Port  Caballo;   ibid.,  p.  1135. 


A  Financial  History  of  Texas  27 

accomplish  reconquest,  but  in  the  early  years  of  the  republic 
this  was  not  understood  by  the  Texans.  A  different  and  less 
costly  policy  toward  the  Indians  also  might  have  been  adopted; 
but  there  was  no  change  in  either  policy  until  1841,  and  by  that 
time  the  greatest  harm  had  been  done.  The  mistake  of  the 
republic  in  preparing  for  defense  is  not  to  be  judged  too  harshly 
because  both  the  Indians  and  the  Mexicans  seemed  a  great  men- 
ace at  that  time. 


Chapter  2. 
receipts. 

Morfit,  the  agent  sent  by  President  Jackson  to  Texas  to  report 
on  its  condition,  wrote  in  September,  1836,  that  "the  present  re- 
sources of  Texas  are  principally  derived  from  the  sympathies  of 
their  neighbors  and  friends  in  the  United  States,  and  by  loans 
upon  the  credit  of  the  State.  "^  With  the  establishment  of  the 
permanent  government  in  October,  however,  this  partial  depend- 
ence upon  philanthropy  was  outgrown,  and  a  system  of  taxation 
was  adopted,  which,  with  the  sale  of  the  public  domain,  was 
expected  to  provide  an  ample  revenue. 

The  system  adopted  was  one  of  direct  and  indirect  taxation. 
Direct  included  the  general  property  tax,  the  poll  tax,  and  license 
taxes.  Indirect  consisted  of  customs  duties  and  an  excise  tax.- 
Of  these  taxes,  customs  are  first  in  importance. 

A.     The  Tariff. 

The  first  general  tariff  was  that  enacted  December  20,  1836.^ 
It  levied  only  ad  valorem  duties,  which  varied  from  1%  on  bread- 
stuffs  to  50%  on  silk  goods.  Sugar  and  coffee  were  charged 
21/2% ;  coarse  clothing  and  shoes,  such  as  were  worn  by  slaves, 
10% ;  iron,  10% ;  wines,  and  spirituous  and  malt  liquors, 
45% ;  all  unenumerated  goods,  which  included  articles  of  most 
common  use,  25%.  The  policy  manifested  in  this  act  of  light 
duties  upon  necessaries  and  heavier  ones  upon  luxuries  was  ad- 
hered to  in  all  subsequent  tariff'  measures.  In  June,  1837,  there 
was  a  more  detailed  act,  in  which  specific  duties  were  largely 
substituted  for  ad  valorem.'*  Its  general  trend,  however,  was  only 
slightly  in  the  direction  of  higher  duties.  Cotton  goods  were 
charged    15% ;    boots    and    shoes,    25%,    as    compared    with 


^House  Executive  Document,  24th  Cong.,  2d.  Sess.,  No.  35.  U.  S.  Doc. 
635. 

-Art.  II,  sec.  1  of  the  constitution  of  the  republic  provides:  Congress 
shall  have  power  to  lay  and  collect  taxes  and  imposts,  excise  and  ton- 
nage duties. 

'Gammel,  op.  cit,  vol.  1,  pp.  1207-8, 

*Act  of  June  12,  1837;   ibid.,  pp.  1313-19. 


A  Financial  Histm^y  of  Texas 


29 


10%  under  the  former  act.  Breadstuff s,  provisions,  groc(Ties, 
meats,  malt  liquors,  coal,  seeds,  wearing  apparel  in  use,  tools  of 
trade,  firearms,  and  building  materials  were  put  on  the  free  list. 
There  were  further  additions  to  the  free  list  in  December,  1837, 
for  the  benefit  of  immigrants.^  The  act  of  February  5,  1840, 
returned  to  the  original  policy  of  ad  valorem  duties,  and,  except 
for  wines  and  liquors,  which  were  charged  the  same  specific  duties 
as  formerly,  a  uniform  ad  valorem  rate  of  15%  was  levied.^  The 
free  list  was  narrowed  to  include  only  the  household  furniture, 
wearing  apparel,  wagons,  necessary  farming  implements,  and  tools 
of  trade,  brought  in  by  immigrants  for  their  own  use,  and  books. 
Provision  also  was  made  by  this  act  for  drawbacks  on  goods  ex- 
ported to  noncontiguous  countries,  and  for  carrying  out  the  com- 
mercial treaty  with  France.  According  to  the  terms  of  this 
treaty,  which  went  into  effect  February  15,  1840,  reciprocal  treat- 
ment of  the  vessels  and  imports  of  each  nation  was  accorded,  and 
Texas  agreed  to  admit  French  silks,  imported  direct  in  French 
or  Texas  ships,  at  one-half  of  the  former  tariff  rates,  and  to 
reduce  the  duties  on  French  wines  by  two-fifths  and  on  brandies 
by  one-fifth.  President  Lamar,  seeking  to  influence  the  French 
government  to  guarantee  the  proposed  Texan  loan,  issued  a 
proclamation  on  February  11,  1840,  abolishing  the  duties  on 
French  wines.^  Treaties  of  amity,  commerce,  and  navigation 
were  signed  also  with  Great  Britain  and  the  Netherlands.*  As 
there  were  no  Texas  vessels  engaged  in  the  foreign  trade,  and  as 
the  direct  commerce  with  these  nations  was  insignificant,  the 
treaties  were  largely  so  much  paper,  and  customs  receipts  were 
not  affected.^ 


^Act  of  December  18,  1837;  Gammel,  op.  cit.,  vol.  1,  p.  1422.  Sugar, 
coffee,  tea,  salt,  flour,  all  kinds  of  breadstuffs,  iron,  steel,  household 
furniture,  cotton  bagging,  bale  rope,  books,  machinery  of  all  kinds, 
wagons,  and  implements,  brought  in  by  immigrants  for  their  own  use, 
w^ere  free. 

^Ibid.,  vol.  2,  pp.  209-225. 

^For  treaty  and  proclamation,  see  Gammel,  op.  cit.,  vol.  2,  p.  655. 

*That  with  Great  Britain  was  signed  in  September,  1842;  that  with 
the  Netherlands  in  January,  1843;  Gammel,  op.  cit.,  vol.  2,  pp.  880-5, 
905-12. 

•^The  commerce  of  Texas  was  overwhelmingly  with  the  United  States. 
The  imports  from  August  1,  1844,  to  October  31,  1845,  were  $1,204,370, 
and  of  this  total  $1,151,733  came  from  the  United  States,  $9,466  from 
Great  Britain  and  Ireland,  and  $2,048  from  France. 


30  Bulletin  of  the  University  of  Texas 

The  act  of  1840  represents  the  closest  approach  to  free  trade 
that  was  made  at  any  time  in  the  history  of  the  republic.  Owing 
to  the  depreciation  of  the  currency  in  which  duties  were  paid,  the 
actual  rate  was  nearer  3%  than  15%,  and  in  1841,  in  order  to 
adapt  the  government  receipts  to  the  depreciation,  all  specific 
rates  were  doubled  and  the  uniform  ad  valorem  rate  of  15%  was 
trebled,  except  for  sugar,  coffee,  salt,  iron,  and  steel,  which  re- 
mained unchanged.^  In  January,  1842,  the  number  of  articles 
subject  to  specific  duties  was  increased,  and  the  average  rate  im- 
posed by  the  act  was  about  25%.  Besides  the  necessary  equip- 
ment brought  in  by  immigrants,  only  Bibles,  testaments,  primary 
school  books,  and  livestock  were  admitted  free.  An  additional 
duty  of  5%  was  imposed  on  all  goods  imported  in  foreign  bot- 
toms, except  where  otherwise  provided  by  treaty  or  act  of  con- 
gress.- The  improvement  in  the  condition  of  the  currency  under 
Houston  accompanied,  and  was  in  part  responsible  for,  this 
change  from  the  high  nominal  rates  of  1841. 

There  were  no  further  changes  in  the  tariff'  during  the  re- 
mainder of  the  period.  The  Eighth  Congress  passed  a  bill  that 
would  have  reduced  duties  to  an  average  of  about  17%,  but  it 
was  vetoed  by  President  Houston  on  the  ground  that  the  republic 
could  not  afford  to  reduce  the  revenue.^  Under  the  Ninth  Con- 
gress, suggestions  for  reduction,  reciprocity,  and  incidental  pro- 
tection were  made,  but  except  for  admitting  ice  free  of  duty,  no 
changes  were  made. 

The  average  rate  of  the  customs  duties  levied  by  the  republic 


^Act  of  February  5,  1841;  Gammel,  op.  cit.,  vol.  2,  p.  576.  Message 
of  President  Lamar,  November  1,  1840.  Kennedy,  Texas,  vol.  2,  p. 
362. 

^Thls  discriminating  duty  aimed  at  the  United  States,  with  whom 
there  was  no  commercial  treaty.  See  Minority  Report  of  the  Senate 
Finance  Committee,  January  6,  1845,  in  Senate  Journal,  9th  Tex. 
Cong.,  p.  120.  The  receipts  due  to  this  5  per  cent  augmentation  were 
for  the  period  August  1,  1844,  to  October  31,  1845,  $34,476  out  of  total 
duties  paid  of  $310,473.  Report  of  the  Secretary  of  the  Treasury,  Feb- 
ruary 15,  1846;  Senate  Journal,  1st  Leg.,  appendix.  For  act  of  January 
27,  1842,  see  Gammel,   op.  cit.,  vol^  2,   pp.  734-7. 

^Veto  message,  February  5,  1844;  Executive  Record,  No.  40.  Ac- 
cording to  the  Telegraph  and  Texas  Register,  February  14,  1844.  little 
public  notice  was  taken  ofl  the  veto  in  view  of  contemplated  annexation. 


A  Financial  History  of  Texas  >      31 

was  not  far  from  25  per  cent.^  There  was  no  great  variation 
from  this  except  under  Lamar  in  1840  and  1841.  Throughout 
the  period  of  the  republic  the  object  of  the  tariff  was  revenue; 
the  only  important  suggestion  of  a  different  policy  was  that 
made  by  President  Jones  that  the  tariff  should  be  primarily  for 
revenue  and  incidentally  for  protection  to  agriculture  and  in- 
dustries.^ 

The  weight  of  the  tariff  lay  upon  the  necessaries  of  life,  such 
as  breadstuffs,  meats,  sugar,  salt,  assorted  gTOceries,  boots  and 
shoes,  dry  goods  and  wearing  apparel,  household  furniture,  tools, 
and  farming  implements.  Distilled  spirits  were  the  most  im- 
portant item  outside  of  this  list.  They  were  taxed  at  high 
specific  rates,  and  from  the  value  of  their  importations  it  is  to 
be  inferred  that  they  constituted  one  of  the  most  productive 
items  of  the  schedule. 

Though  the  average  rate  of  duty  was  comparatively  low, 
opposition  to  the  tariff  was  frequently  expressed.  It  was  not  so 
much  the  principle  that  was  objected  to,  as  it  was  the  vmequal 
operation  upon  the  different  sections.  The  western  and  middle 
districts  obtained  their  imported  goods  through  Galveston  and 
the  other  gulf  ports  of  entry,  where  evasion  was  difficult.  The 
eastern  district,  however,  bordering  as  it  did  on  the  United  States, 
obtained  its  supplies  overland,  and  the  long  stretch  of  land 
boundary  made  smuggling  easy.  As  the  eastern  was  the  most 
populous  and  wealthy  section,  the  evasion  by  it  of  its  share  of 
the  burden  of  the  tariff  was  a  subject  of  frequent  and  bitter 
complaint.^ 


^For  the  three  years  ending  September  30,  1838,  the  average  rate 
was  19.3  per  cent;  for  the  year  ending  September  30,  1840,  17  per  cent; 
for  the  year  ending  July  31,  1844,  26.6  per  cent;  for  the  period  from 
August  1,  1844,  to  October  31,  1845,  25.7  per  cent.  The  statistics  neces- 
sary in  order  to  obtain  the  average  of  other  years  are  lacking. 

^Inaugural  address,  December  9,  1844;  Executive  Record,  No.  40. 
The  Telegraph  and  Texas  Register,  December  18,  1844,  expressed  its 
unqualified   disapproval  of  the  president's  suggestion. 

^The  Telegraph  and  Texas  Register,  November  14,  1838;  June  9,  1841; 
October  5,  1842;  September  6,  1843;  January  3,  1844.  Report  of  the 
Secretary  of  the  Treasury,  November  1,  1842.  Report  of  the  House 
Finance  Committee,  December  17,  1842;  House  Journal,  7th  Tex.  Cong., 
p.  74.  Report  of  the  special  committee  on  a  memorial  presented  by 
the  citizens  of  Galveston  and  Houston,  January  22,  1845;  House  Jour- 
nal,  9th   Tex.  Cong.,   p.   272. 


32  Bulletin  of  the  University  of  Texas 

Another  objection  to  the  tariff  Avas  that  it  drove  mercantile 
capital  out  of  the  eastern  part  of  ^he  republic,  because  farmers 
found  it  more  profitable  to  take  their  products  to  Shreveport  and 
other  Louisiana  points  and  exchange  them  for  supplies  'than 
to  trade  with  home  merchants  who  charged  prices  which  included 
tariff  duties.^  Other  objections  were  that  it  deterred  immigra- 
tion,2  and  militated  against  the  recognition  by  England  of  Texas 
independence.^ 

On  the  other  hand,  it  was  urged  in  favor  of  'the  continuance 
of  the  tariff  that  it  was  the  most  productive,  certain,  and  least 
objectionable  way  of  raising  revenue,*  and  that  it  was  necessary 
in  order  to  sustain  the  treasury  notes. ^  Repeal,  it  was  also  said, 
would  be  in  favor  of  the  commercial  interests  and  to  the  detri- 
ment of  the  agricultural,^  and  would  lead  to  such  an  increase 
in  importations  as  to  drain  the  country  of  the  "means  requisite 
to  its  prosperity. '  '^ 

The  administration  of  the  customs  Avas  under  the  direction 
of  the  treasury  department.  There  were  collectors  and  deputy 
collectors  appointed  by  the  president,  and  inspectors  and  clerks 


^Report  of  Finance  Committee,  December  17,  1842;  House  Journal, 
7th   Tex.  Cong.,   p.   74. 

^'Ibid.,  p.  75. 

^Report  of  Special  Senate  Committee  on  the  Tariff,  1839;  in  appendix 
to  Senate  Journal,  9th  Tex.  Cong. 

*Report  of  Finance  Committee,  December  22,  1838;  House  Journal, 
3rd  Tex.  Cong.,  p.  206.  Report  of  Finance  Committee,  January  21, 
1841;  House  Journal,  5th  Tex.  Cong.,  p.  406.  Report  of  the  Secretary 
of  the  Treasury,  November  1,  1842.  Veto  message  of  President  Hous- 
ton, February  5,  1844.    Message  of  President  Jones,  December  16,  1844. 

^Report  of  Finance  Committee,  December  22,  1838;  House  Journal, 
3rd.  Tex.  Cong.,  p.  209.  It  did  not  occur  to  this  committee  that  if  the 
amount  raised  by  customs  duties  were  raised  by  a  direct  tax,  the 
demand  for  the  notes  would  at  least  be  the  same. 

^Report  of  the  Finance  Committee,  December  22,  1838;  House  Jour- 
nal, 3rd.  Tex.  Cong.,  p.  208.  Houston,  also,  in  his  message  of  December 
20,  1841,  said  that  the  principal  reason  he  favored  reliance  upon  im- 
port duties  was  that  they  were  more  just  and  equitable.  Direct  taxa- 
tion bore,  he  thought,  directly  upon  the  farmer. 

'Report  of  Finance  Committee,  January  21,  1841;  House  Journal, 
5th  Tex.  Cong.,  appendix,  p.  406.  This  argument  was  not  developed 
by  the  committee,  but  as  a  suggestion  it  is  fallacious. 


A  Financial  History  of  Texas  .   33^ 

appointed  by  the  collector.  Collectors  were  required  to  givo 
bond,  and  their  compensation  varied  in  accordance  with  the  im- 
portance of  the  port  of  entry.  The  act  of  June  12,  1837,  al- 
lowed a  commission  of  21/2  per  cent  nntil  the  sum  amounted  to 
$2,000,  after  which  the  commission  was  one-half  of  1  per  cent/ 
The  retrenchment  policy  under  Houstx)n  led  to  a  reduction  in 
compensation,  and  a  maximum  salary,  including  fees,  was  fixed 
at  $1,200  for  the  port  of  Galveston,  and  at  smaller  sums  for  the 
other  points  of  entry.-  In  order  that  the  eastern  district  might 
be  better  administered  the  sheriffs  of  the  counties  that  lay  in  that 
district  were,  in  1841,  made  collectors,  and  were  allowed  a  com- 
mission of  10  per  cent  upon  their  collections.'' 

The  practical  absence  of  any  checks  upon  collectors  made 
abuses  of  trust  possible.  There  are  no  complaints  of  connivance 
of  officials  with  smuggling,  but  smuggling  was  practiced  on  a 
large  scale.* 

The  cost  of  collection  was  greater  under  the  commission  than 
under  the  salary  method  of  payment.  For  the  three  years  end- 
ing September  30,  1838,  the  cost  was  17.2%,  and  for  the  nine 
months  ending  October  31,  1842,  14.8%  ;  Avhile  for  the  year 
ending  July  31,  1844,  it  was  11.7%,  and  for  the  fifteen  months 
ending  October  31,  1845,  only  11%. 

The  tariff  was  truly  the  foundation  of  the  finances  of  the 
republic.^  Of  the  total  receipts  of  the  entire  period,  it  con- 
tributed a  little  over  58%.     From  the  beginning  down  to  1842 


'Section  7;   Gammel,  op.  cit.,  vol.  1,  p.  1313. 

^Section  4  of  the  act  of  January  27,   1842;    ibid.,  vol.  2,  p.   736. 

'Joint  Resolution,  February  6,  1841;  ibid.,  vol.  2,  p.  623.  The  act  of 
February  3,  1845,  in  order  to  elicit  more  vigilance  on  the  part  of  the 
regular  collectors  in  the  eastern  district,  allowed  half  of  the  commis- 
sion and  fees  arising,  which  was  in  addition  to  the  maximum  salary 
prescribed  in  the  act  of  January  27,  1842;   ibid.,  vol.  2,  p.  1134. 

"Houston,  in  a  message  of  June  27,  1842,  said  that  the  government 
lost  at  least  one-half  of  the  revenue  to  which  it  was  entitled  because 
of  smuggling.  In  a  message  of  December  4,  1844,  he  stated  that  there 
had  been  defalcations  of  $60,000  by  collectors. 

''President  Houston,  in  his  address  to  the  First  Congress,  May  5,  1837, 
said  that  the  public  domain  was  "the  foundation  of  the  finances." 
But  this  source,  from  which  he  expected  so  much,  contributed  only 
about  14  per  cent  of  the  total  revenue.    » 

3— H 


"34  Bulletin  of  the  University  of  Texas 

it  contributed  42.5%,  while  from  1842  to  the  close  of  the  period 
its  share  was  83%.  During  the  first  period  it  was  stall  a  ques- 
tion as  to  whether  direct  or  indirect  taxation  should  prevail,  but 
after  1841  there  was  a  complete  breakdown  of  direct  taxation 
which  was  due  in  part  to  a  popular  preference  for  paying  taxes 
indirectly.^  As  compared  with  other  sources,  Customs  receipts 
were  also  much  the  most  uniform  from  year  to  year,  and  such 
fluctuations  as  occurred  were  due  not  so  much  to  changes  in  rates 
as  to  the  condition  of  the  currency. 

Up  to  1843  treasury  notes  and  8%  bonds  were  receivable  at 
par  in  payment  of  duties.  After  1843  only  specie  and  exchequer 
bills,  as  the  treasury  notes  issued  during  Houston's  second  ad- 
ministration were  called,  were  receivable,  and  the  latter  were 
accepted  only  at  the  current  rate  of  discount*  in  the  market. 
As  duties  were  paid  upon  invoice  cost,  and  as  this  was  based 
on  treasury  notes,  the  depreciation  of  the  notes  was  reflected  in 
the  value  of  importations.  Down  to  1842  the  years  of  largest 
receipts  were  1840  and  1841,  and  these  were  the  years  also  of 
largest  circulation  and  greatest  depreciation  of  the  notes.  The 
annual  average  of  receipts  during  1842,  1843,  and  1844  is  less 
than  that  of  any  preceding  year.  The  increase  in  population 
and  the  improvement  in  the  general  economic  situation  of  the 
republic  would  be  expected  naturally  to  result  in  increased  im- 
ports and  duties  paid,  aiid  the  failure  of  the  revenue  statistics 
to  show  this  is  due  to  the  improvement  in  the  currency.  The 
red-backs,  or  old  issues  of  notes,  were  not  receivable  for  duties 
after  February  1,  1843,  and  the  exchequer  bills  which  suc- 
ceeded the  red-backs,  while  depreciated  considerably  at  first, 
never  fell  as  low  as  the  old  notes,  and  were,  besides,  received 
only  at  their  current  market  quotation. - 


^Henry  Smith,  secretary  of  the  treasury,  said  in  a  communication 
to  the  senate,  November  29,  1838,  that,  as  a  general  rule,  direct  taxa- 
tion was  odious,  and  that  in  the  situation  of  Texas  it  could  not  be 
relied  upon  with  certainty.  See  also  Houston's  message  of  December 
20,  1841,  and  the  Telegraph  and  Texas  Register,  November  30,  1842. 

'After  1843  the  customs  began  to  show  receipts  in  par  funds.  The 
report  for  the  year  ending  July  31,  1844,  showed  $73,299  in  specie, 
and  $109,157  in  exchequer  bills  which  were  worth  in  specie  $95,486. 
The  report  for  the  fifteen  months  ending  October  30,  1845,  gave  specie 
receipts  at  $202,121,  and  exchequer  bills  at  $140,997,  which  had  a 
JBpecie  value  of  $135,680. 


A  Fimancial  History  of  Texas  35 

B.     Tonnage  Dues  and  Port  Fees. 

The  several  acts  to  levy  customs  duties  imposed  also  tonnage 
duties,  and  entrance,  clearance  and  other  port  fees.  These  were 
reported  by  collectors  along  with  customs  receipts,  and  commis- 
sions, when  they  were  the  method  of  compensation,  were  al- 
low^ed  upon  their  amount.  The  bases  for  port  charges  were 
until  1840  such  as  were  paid  in  the  ports  of  the  United  States 
for  the  same  service,^  but  the  act  of  February  5,  1840,  prescribed 
a  schedule  of  new  charges.- 

By  the  act  of  December  20,  1836,  a  tonnage  duty  of  25  cents 
a  ton  was  levied  upon  all  vessels  of  the  burden  of  10  tons  and 
upward  from  a  foreign  port.^  This  was  raised  to  $1.00  by  the 
act  of  June  12,  1837.^  In  order  to  encourage  steam  navigation, 
steam  packets  w^ere  exempted  from  tonnage  dues  in  1837,  but 
this  was  repealed  in  1839.^  In  1841  it  was  provided  that  all 
vessels  built  in  Texas  and  sailing  under  its  flag  should  be  free 
of  tonnage  duty,^  but  the  act  of  January  27,  1842,  prescribed 
dues  of  60  cents  a  ton. for  merchant  vessels  and  30  cents  for 
steamboats,'  and  in  1844  it  was  provided  that  vessels  of  those 
powers  with  which  Texas  had  no  treaty,  should  pay  $1.00.' 
In  1845  Texas  vessels  and  vessels  of  powers  having  a  com- 
mercial treaty  with  Texas  paid  62i/^  cents  a  ton,  and  the  vessels 
of  other  countries  $1.00.^  Reciprocal  treatment  in  regard  to 
tonnage  dues  and  port  charges  were  provided  for  in  the  com- 
mercial treaties  with  France,  Great  Britain,  and  the  Netherlands, 
but,  as  in  the  case  of  customs  duties,  the  effect  upon  receipts 
was  neglisrible,  because  the  direct  trade  was  insignificant. 


^Act  of  June  12,  1837,  section  5;   Gammel,  op,  cit.,  vol.  1,  p.  1317. 

^Entrance  and  clearance  of  ships  of  less  than  100  tons,  $1.50;  of 
more  than  100  tons,  $2.50;  every  port  entry,  $2.00;  permits  to  land  or 
load  goods,  20  cents:  bills  of  health  and  other  documents,  20  cents. 
Ibid.,  vol  2,  p.   209. 

'Ibid.,  vol.   1,  p.  1286. 

*Ibid.,  p.  1317. 

•Act  of  December  18,  1837;  ibid.,  p.  1428.  Act  of  January  10,  1839; 
ibid.,  vol  2,  p.  40. 

•Act  of  January  4,  1841;    ibid.,  p.  480. 

»Ibid.,  p.  737. 

"Act  of  February  5,  1844;  ibid.,  p.  107. 

^Act  of  February  1,  1845;  ibid.,  p.  1109. 


36  Bulletin  of  the  University  of  Texas 

There  are  no  statistics  shoAving-  the  receipts  from  these  sources, 
except  for  the  year  1844,  when  tonnage  dues  amouated  to 
$15,446.  and  fees  of  office  and  blanks,  $2.390 ;  and  for  the  fifteen 
months  ending  January  1,  1846,  when  the  amount  derived  from 
all  items  of  this  character  was  $25^,433.^ 

C.     The  Property  Tax. 

No  direct  taxes  were  levied  by  any  of  the  revolutionary  gov- 
ernmental bodies,  because  of  the  delay  involved  in  their  estab- 
lishment and  operation,  the  state  of  confusion  existing  in  the 
country,  and  the  inchoate  condition  of  land  titles.^  Upon  the 
establishment  of  the  permanent  government  improved  conditions 
made  the  adoption  of  a  system  of  direct  taxation  practicable, 
and  Kennedy,  the  Englishman,  writing  in  1841,  felt  justified  in 
saying  that  Texas  had  "set  the  example  of  resorting  to  direct  in 
preference  to  indirect  taxation."^ 

The  act  of  June  12,  1837,  which  was  the  first  direct  tax  meas- 
ure, provided  simply  that  an  ad  valorem  tax  of  %  of  1%  should 
be  levied  on  all  ''real,  personal,  or  mixed"  property.*  It  was  es- 
pecially provided,  however,  that  cattle  and  horses  belonging  to 
citizens  of  the  United  States  should  pay  $1  per  head.''  The  act 
of  May  24,  1838,  enumerated  the  property  that  should  be  sub- 
ject to  the  direct  tax,  and  the  list  included  only  land,  slaves, 
horses  over  two  in  number,  cattle  over  twenty-five  in  number, 
watches,  clocks,  and  pleasure  carriages.^  The  rate  remained  at 
%  of  1%.     In  1839  land  certificates  were  singled  out  for  specific 


^It  is  not  possible  to  state  separately  how  much  was  derived  from 
tonnage  dues  and  how  much  from  other  charges  for  the  period  ending 
January  1,  1846.  The  receipts  from  these  sources  for  other  years  are 
not  separated  from  customs  receipts,  and  the  latter  are  vitiated,  there- 
fore, to  the  amount  of  the  former. 

^Art.  20  of  the  "Plan  and  Powers  of  the  Provisional  Government" 
provides  that  the  governor  and  council  shall  have  the  power  to  adopt 
a  system  to  meet  the  exigencies  of  the  country.  Gammel,  op.  cit.,  vol.  1, 
p.  909. 

^History  of  Texas,  vol.  2,  p.  363. 

*Sec.  1;  Gammel,  op.  cit.,  vol.  1,  p.  1319. 

''Sec.  7.  This  was  repealed  by  the  act  of  January  16,  1840,  but  was 
restored  by  the  act  of  February  3,  1845. 

*Sec.  8;    Gammel,  op.  cit.,  vol.  1,  p.  1514. 


A  Fmancial  History  of  Texas  37 

taxes,  the  amount  varying  with  the  quantity  of  land.^  Up  to 
1840  the  only  specific  taxes  levied  were  those  on  live  stock  be- 
longing to  non-residents,  and  land  certificates.  In  1840,  how- 
ever, this  method  of  taxation  was  very  much  extended.  Only 
land,  buildings  in  towns,  and  money  loaned,  became  subject 
to  ad  valorem  rates,  while  upon  slaves,  livestock,  pleasure  car- 
riages, watches,  and  clocks  there  were  levied  specific  taxes. 
Merchandise  was  reached  by  a  tax  on  sales,  and  merchants 
were  subject  also  to  license  taxes,  as  were  hotel,  restaurant, 
and  boarding-house  keepers,  liquor  dealers,  and  owners  of  bil- 
liard tables,  nine-pin  alleys,  and  games  of  such  kind.  The  ad 
valorem  rate  was  I/2  of  1%  on  land  whose  owners  were  citizens 
of  the  republic,  and  1%  on  land  whose  owners  were  non- 
residents and  on  land  held  by  an  agent  or  attorney  for  another.^ 
For  the  remainder  of  the  -period  of  the  republic,  the  practice 
of  enumerating  the  property  that  was  subject  to  taxation  and 
imposing  ad  valorem  rates  on  real  property  and  specific  rates  on 
personal  property  was  followed.  The  notable  act  of  February  5, 
1842,  departed  from  the  rule  only  in  making  pleasure  carriages 
subject  to  an  ad  valorem  instead  of  a  specific  rate.  Besides  im- 
posing a  tax  of  $3  per  year  on  each  horse  kept  exclusively  for 
racing,  and  reducing  considerably  all  rates,  this  act  also  adopted 


I 


^These  certificates  represented  the  right  to  the  location  of  land.  The 
specific  taxes  levied  were:  on  a  certificate  for  less  than  640  acres,  $1; 
for  640  acres  and  less  than  1280,  $2;  for  1280  acres  and  less  than  one- 
third  of  a  league,  $3;  for  one-third  of  a  league  and  less  than  one 
league,  $4;  for  one  league  and  labor,  $5.  Act  of  January  26,  1839,  sec. 
8;   ibid.,  vol.  2,  p.  141. 

-Act  of  January  16,  1840;  ibid.,  pp.  183-202.  The  property  subject 
to  specific  taxes  was  as  follows:  Each  horse  kept  exclusively  for  rid- 
ing, $10;  for  riding  or  carriage,  $1;  every  stud  or  jack,  the  price  of  a 
stand;  all  other  horses  and  mules,  except  four  each  for  every  farmer 
or  laboring  man,  25  cents  a  head;  cattle  over  twenty-five  in  number, 
10  cents  a  head;  pleasure  carriages,  $1  for  each  wheel;  slaves  under 
fifteen  years  of  age,  $1  per  head;  slaves  between  fifteen  and  fifty 
years  of  age,  $3;  slaves  over  fifty  years,  $2;  gold  watches,  $3  each;  sil- 
ver watches,  $1;  clocks  with  metal  works,  $3;  clocks  with  other  than 
metal  works,  $1;  every  pack  of  playing  cards  sold,  given  away,  loaned 
or  otherwise  disposed  of,  $3.  The  practice  of  discriminating  against 
land  held  by  an  agent  was  begun  by  the  act  of  January  26,  1839,  which 
imposed  a  double  tax  on  it;   ibid.,  p.  140. 


38  Bulletin  of  the  University  of  Texas 

a  curiously  variable  ad  valorem  rate.  In  the  acts  of  1837  and 
1840  the  ad  valorem  rate  was  the  same  on  all  kinds  of  property, 
except  where  the  land  was  held  by  non-residents  or  by  agents  or 
attorneys.  The  act  of  1842,  however,  levied  a  rate  of  1/10  of  1% 
on  land  owned  by  residents,  1/5  of  1%  on  that  owned  by  non- 
residents, 1/4  of  1%  on  town  lots  and  improvements  and  money 
loaned  at  interest,  and  %  of  1%  on  pleasure  carriages.^ 

Ae  is  to  be  seen  from  the  preceding  account,  considerable 
property  was  exempt  from  taxation.  The  act  of  1837  included 
all  property,  but  in  that  of  1838  only  those  things  were  subject 
which  were  enumerated,  and  improvements  upon  land,  house- 
hold and  kitchen  furniture,  wearing  apparel,  and  all  that  is  un- 
derstood as  intangibles,  were  omitted  from  the  enumeration.  In 
the  act  of  January  16,  1840,  improvements  upon  land  in  towns 
were  made  taxable,  but  those  upon  'agricultural  lands,  and  other 
property  not  specifically  set  forth  in  the  act,  were  expressly  ex- 
empted.- From  1838  to  1845  livestock  below  a  certain  number 
were  exempted,  and  in  1841  one  saddle  horse  became  tax  free 
to  each  member  of  a  volunteer  company  organized  in  certain 
frontier  counties.^  It  was  the  practice  also  from  1839  to  exempt 
the  property  of  colleges  and  universities  either  for  five  years  or 
for  an  undefined  period.*  It  was  not  until  1845,  however,  that 
legal  exemption  of  property  held  for  religious  purposes  was 
made.'* 

Up  to  1840  it  was  the  rule  to  assess  property,  both  real  and 


^The  specific  rates  levied  by  the  act  of  February  5,  1842,  were: 
horses  and  mules,  except  four  for  each  farmer  or  laborer,  10  cents  a 
head;  cattle  over  twenty-five  in  number,  3  cents  a  head;  slaves  under 
ten  years  of  age,  25  cents  each;  slaves  between  ten  and  sixty  years  of 
age,  75  cents;  gold  watches  in  use,  $1;  silver  watches  in  use,  50  cents; 
clocks  with  metal  works,  in  use,  75  cents;  clocks  with  wooden  works, 
in  use,  25  cents.  Gammel,  op.  cit.,  vol.  2,  p.  778.  The  act  of  February 
3,  1845,  levied  a  tax  of  1  cent  a  head  on  all  cattle;  but  on  cattle,  horses, 
and  mules  owned  by  non-residents  of  the  republic,  except  such  as  were 
owners  through   heirship,   the  tax  was   $1  a   head;    ibid.,   pp.   778-780. 

=Sec.  38;   ibid.,  p.  200. 

•Ibid.,  p.  647. 

*Each  charter  of  incorporation  provided  for  the  exemption;  ibid., 
pp.  144,  427,  540,  612,  920,  950,  1133,  1149,  1177. 

''Act  of  January  30,  1845;  ibid.,  p.  1100.  The  exemption  extended  to 
lands  not  exceeding  ten  acres,  buildings,  and   furniture. 


A  Financial  History  of  Texas 


m 


personal,  at  the  place  where  the  owner,  agent,  or  administrator 
resided.  A  change  was  made  by  the  act  of  January  16,  1840, 
which  provided  that  a  person  holding  taxable  property  in  any 
other  county  than  that  in  which  he  resided  might  send  to  the- 
assessor  of  the  county  where  the  property  was  located  a  sworn-- 
list  of  such  property.^  There  was  a  return  to  the  old  rule,  how- 
ever, in  1841.2. 

The  mixed  system  of  ad  valorem  and  specific  taxes  obviated 
many  of  the  difficulties  of  valuation.  The  law  of  June  12,  1837,. 
required  the  person  rendering  property  to  give  a  complete  in- 
ventory and  "a  fair  valuation".  If  the  assessor  thought  the 
valuation  too  low,  he  had  to  call  in  two  citizens  to  value  the 
property.^  In  1839  a  decided  change  w^as  made  by  devolving 
upon  the  chief  justice  of  each  county,  assisted  by  two  citizens,  the 
valuation  of  the  inventories  of  assessment.*  But  in  1840  this 
innovation  was  given  up  and  the  plan  of  permitting  both  inventory 
and  valuation  by  the  person  assessed  was  restored.^  It  was  stip- 
ulated in  the  act  of  1840,  however,  that  the  minimum  valuationi 
of  land  should  be  $1  per  acre,  that  of  unimproved  lots  in  an  in- 
corporated town,  $50,  in  an  unincorporated  town,  $25.® 

The  work  of  assessment  was  done  by  an  assessor  appomted',- 
until  1840,  by  the  county  court  and  thereafter  by  the  commissioner 
of  roads  and  revenue.  In  1839  he  was  replaced  by  a  ''returning 
officer ' '  in  each  precinct,  w^ho  w^as  appointed  by  the  county  court, 
and  w^hose  duty  was  simply  to  record  the  renditions  made.'^  This 
plan  was  discontinued  in  1840.  Until  1842  the  assessor  was  ap- 
pointed for  one  year,  but  after  that  for  three  years  f  and  up  to 
1840  candidates  for  the  position  made  sealed  proposals  to  the 
chief  justice  of  the  county,  and  he  was  appointed  who  seemed 
"best  calculated  to  perform  the  duties  required  and  protect  the 


^Section  6;   ibid.,  p.  185. 

^Act  of  February  4,  1841,  section  2;    ibid.,  p.   577. 
^Section  3;    Gammel,  op.  cit.,  vol.  1,  p.  1319. 
'Act  of  January  26,  1839,  section  3;   ibid.,  vol.  2,  p.  141. 
''Act  of  January  16,  1840;  ibid.,  p.  184. 

«=Ibid.,  pp.  186,  190.     The  act  of  February  5,  1842,  reduced  the  mini- 
mum valuation  of  land  to  50  cents  an  acre;  ibid.,  p.  778. 
'Act  of  January  26,  1839,  section  1;    ibid.,  p.  140. 
*Act  of  February  5,  1842,  section  8;    ibid.,  p.  778. 


40  Bulletin  of  the  University  of  Texas 

public  interest. '  '^  The  method  of  compensation  in  the  form  of  a 
graduated  percentage  of  the  assessment  was  adopted  in  1840; 
up  to  that  time,  the  compensation  was  that  proposed  in  the  bid 
for  the  position.^  The  assessor  was  thus  a  county  officer  whose 
assessment  served  as  the  basis  for  county  and  republic  tax  levies. 
He  was  under  oath  and  bond  to  perform  his  duties  faithfully. 
These  duties  were  few,  consisting,  briefly,  of  giving  notice  in 
several  public  places  of  the  time  when  he  would  be  present  at 
the  mustering  ground  or  captain's  beat  in  each  precinct  to  re- 
ceive the  inventories  of  property;  of  attending  these  places  at 
the  advertised  time  and  receiving  such  lists;  of  administering 
oaths ;  of  arranging  for  disinterested  valuation  where  he  deemed 
the  value  given  by  the  owner  to  be  too  low ;  and  of  giving  notice 
to  delinquents  and  posting  taxable  lists.  Until  1840  twenty 
days'  notice,  and  after  1840,  ten  was  required  to  be  given.  On 
the  day  specified  in  the  notice  persons  were  required  to  present 
themselves  with  a  list  or  inventory  of  their  taxable  property.  In 
1840  only  sickness  or  absence  from  the  county  excused  one  from 
not  attending  in  person  the  place  of  assessment,  and  permitted 
instead  a  sworn  list  to  be  sent.  Those  not  attending  were  sub- 
ject to  a  penalty  of  $10  as  a  compensation  to  the  assessor  for 
having  to  go  to  their  residence.  If  the  assessor  did  not  find  the 
individual  at  home,  he  left  a  written  notice  to  the  effect  that  if 
the  list  were  not  in  by  the  date  set  for  completing  the  assessment, 
he  himself  would  make  an  assessment  to  the  best  of  his  informa- 
tion. A  person  assessed  under  these  circumstances  was  liable  not 
only  to  the  penalt^^  of  $10  but  also  to  a  double  tax. 

The  time  varied  as  to  when  assessments  should  be  completed. 
The  act  of  June  12,  1837,  required  that  returns  should  be  made 
by  the  assessors  to  the  treasury  department  before  the  meeting 
of  the  next  congress  which  was  early  in  November.  The  time 
thus  allowed  for  the  appointment  of  assessors  and  the  work  of 
assessment  for  this  year  was  very  short.  The  act  of  1839  pro- 
vided that  the  returning  officers  should  complete  the  inventories 


^Act  of  June  12,  1837,  section  o;   ibid.,  vol.  1,  p.  1321. 

-The  act  of  January  16,  1840,  section  27,  provided  for  5  per  cent  on 
the  first  $2,000  of  taxes  assessed,  3^  per  cent  on  the  next  $4,000,  2  per 
cent  or  the  next  $6,000,  and  1  per  cent  on  the  remainder;  ibid.,  vol. 
2,  p.  198. 


A  Financial  History  of  Texas  i\ 

and  turn  them  over  to  the  chief  justice  of  the  county  on  or 
before  December  1.  By  the  act  of  January  16,  1840,  the  roll 
had  to  be  returned  to  the  treasury  department  by  the  fourth 
Monday*  in  July,  or  the  assessor  incurred  a  penalty  of  $1,000. 
The  act  of  1842  fixed  the  date  of  completion  of  assessment  at 
December  1,  but  after  1843,  it  was  September  1. 

The  requirements  as  to  the  manner  of  compiling  and  recording 
the  inventories  were  few  and  simple.  The  provision  in  the  act 
of  June  12,  1837,  was  that  "the  register  shall  show  in  proper 
columns  the  person's  name,  quantity  of  land  in  acres,  number  of 
negroes,  horned  cattle,  horses  and  mules,  and  miscellaneous,  in- 
cluding all  other  unclassed  articles.  Under  each  specific  head 
shall  appear  the  number  and  amount  belonging  to  each  individual, 
and  one  column  showing  the  aggregate  or  gross  amount,  and 
another  column  showing  the  corresponding  amount  due  from 
each."i 

The  act  of  January  16,  1840,  required  of  each  person  holding 
property  for  others,  three  inventories:  one  for  the  property  he 
owned,  a  second  for  the  property  he  held  as  guardian,  executor, 
or  administrator,  and  a  third  for  that  which  he  held  as  agent  or 
attorney.^  The  fact  that  no  separation  of  such  property  was 
required  before  1840  shows  the  crudity  of  the  early  law.  Through- 
out the  period  1836-1860  the  assessment  rolls  were  made  out  in 
duplicate,  one  of  which  was  sent  to  the  treasury  department,  the 
other  turned  over  to  the  collector.^ 

By  the  act  of  June  12,  1837,  the  oath  taken  by  the  taxpayer 
was  in  regard  to  the  completeness  of  the  inventory  and  the  fair- 
ness of  the  valuation.  In  1838  an  oath  had  to  be  made  by  the 
taxpayer  that  there  had  been  no  removal  of  property  in  order 
to  avoid  taxation  ;^  but  after  1839  the  oath  was  only  to  the  effect 
that  the  inventory  was  complete.  False  rendition  was,  by  the 
act  of  1837,  an  indictable  offense,  and  entailed  also  a  double 
tax,®  but  in  1842  a  forfeit  of  5%  a  month  on  the  amount  not 


^Section  2;    ibid.,   vol.  1,  p.   1320. 

'Section  5;   ibid.,  vol.  2,  p.  1321. 

''Act  of  June  12,  1837,  section  2.     Act  of  January  16,  1840,  section  8. 

^Section  3;    Gammel,  op.  cit.,  vol.  1,  p.  1319. 

^Act  of  May  24,  1838,  section  2;  ibid.,  p.  1513. 

''Act  of  June  12,  1837,  section  3. 


i 


42  Bulletin  of  the  University  of  Texas 

rendered  or  undervalued  was  substituted  for  the  double  tax 
penalty.^ 

The  collection  of  the  property  tax  was  performed  by  the  sheriff 
of  the  county.  He  was  an  elective  officer,  holding  office  for  two 
years,  and  received  in  compensation  for  the  work  of  collection  a 
commission  of  5%.^  In  the  same  manner  as  the  assessor  he  gave 
notice  as  to  when  and  where  the  payment  of  taxes  would  be 
received.  Under  the  act  of  June  12,  1837,  collection  began 
October  1,  and  returns  had  to  be  made  to  the  treasury  depart- 
ment by  January  1.  The  act  of  December  21,  1837,  made  Sep- 
tember 1  the  date  of  return  to  the  treasury  departinent,  with  the 
result  that  collection  was  made  during  the  summer,  or  months 
when  the  farmer  was  least  able  to  pay.  It  was  not  until  1842 
that  collection  was  provided  for  during  the  convenient  months 
of  the  quarter  beginning  with  December.^ 

The  rule  until  1840  was  that  taxes  should  be  paid  in  the  county 
where  the  owner  or  agent  or  administrator  resided.  In  1840 
it  was  provided  that  payment  should  be  made  in  the  county  where 
the  property  was  located.*  Failure  to  pay  taxes  by  the  date  set 
was  followed  by  execution  and  sale  by  the  sheriff  of  any  property, 
real  or  personal,  and  until  1843  delinquent  property  was  also 
subject  to  a  double  tax.^  According  to  the  act  of  May  24,  1838, 
real  estate  could  be  redeemed  by  the  original  owner  within  twelve 
months  from  the  date  of  sale  by  repaying  the  purchase  price  plus 
50%.  This  was  changed  in  1839  so  that  redemption  could  be 
made  within  two   years  by   paying   the   purchaser   double   the 


^Act  of  February  5,  1842,  section  6;  ibid.,  vol.  2,  p.  780. 

^Act  of  December  20,  1837;  ibid.,  vol.  1,  p.  1239.  .January  16,  1840; 
ibid.,  vol.  2,  p.  199. 

^Act  of  February  5,  1842;  ibid.,  p.  778. 

^Act  of  January  16,  1840;  ibid.,  p.  187. 

"By  the  act  of  December  21,  1837,  failure  of  payment  was  to  be  fol- 
lowed by  execution  against  the  property  of  the  delinquent,  issuable  by 
any  justice  of  the  peace  of  the  county,  and  sale  by  the  sheriff  of  as 
much  as  was  necessary  to  satisfy  the  taxes  and  costs;  ibid.,  vol.  1, 
p.  1455.  By  the  act  of  January  26,  1839,  thirty  days  notice  of  public 
sale  was  added;  by  the  act  of  January  16,  1840,  forty  days  notice  in 
the  case  of  lands  and  twenty  days  in  the  case  of  personal  property. 
The  act  of  February  5,  1842,  provided  that  the  assessor's  list  should 
have  the  force  and  effect  of  an  execution,  and  sixty  days  notice  of  sale 
was    required;    ibid.,    vol.    2,   pp.    88,   781. 


A  Financml  History  of  Texas  43 

amount  of  the  purchase  price.  The  act  of  January  16,  1840, 
added  20%  interest  on  double  the  purchase  price  and  taxes. 
Finally,  the  act  of  February  5,  1842,  provided  that  redemption 
might  be  made  within  one  year  by  simply  paying  double  the 
purchase  price. 

D.     Business  Taxes. 

The  taxation  of  business  took  the  form  of  license  and  excise 
taxes,  and  taxes  upon  gross  sales  of  merchandise.  There  were 
no  taxes  of  this  character  until  June,  1837,  and  from  then  until 
1840,  merchants  were  subject  to  an  annual  license  charge  of  $50 
for  each  establishment;  public  inns  and  dealers  in  spirituous 
liquors,  $100;  nine  pin  alleys  and  like  places  of  amusement, 
$150 ;  owners  of  billiard  tables  for  each  table,  $200 ;  and  peddlers, 
$50  in  each  county.^  In  1840  there  came  an  increase  in  rates,  a 
change  in  the  form  of  taxes,  and  additions  to  the  list  of  occupa- 
tions taxed.^  Merchants  became  subject  to  an  annual  license 
charge  of  $100,  and  wholesale  merchants  were  further  required 
to  pay  25  cents,  and  retail  merchants,  50  cents,  on  every  $100 
worth  of  merchandise  sold  during  the  year.  Where  spirituous 
liquors  were  sold  by  retailers  of  merchandise,  an  additional 
license  tax  of  $100  was  charged.  The  tax  on  billiard  tables  was 
raised  to  $250,  that  on  nine-pin  alleys  to  $200.  The  tax  on  public 
inns  remained  at  $100,  while  that  on  peddlers  was  reduced  to 
$25.  The  additions  to  the  list  were  theaters  which  paid  $200; 
museums,  wax  works,  and  the  like,  $50 ;  public  race  tracks,  $100 ; 
boarding  houses  having  five  or  more  persons  for  pay,  $50 ;  cook- 
shops  and  restaurants,  $50;  real  estate,  ship  and  merchandise 
brokers,  $100,  and  money  brokers  $100  and  3%  on  each  $100 
loaned;  auctioneers,  who  paid  upon  sales,  an  ad  valorem  rate 
which  varied  from  1%  to  2%,  according  to  the  commission  re- 
ceived and  the  kind  of  property  sold.^     The  act  also  imposed  an 


^Act  of  June  12,  1837;  ibid.,  vol.  1,  1311. 

"Act  of  January  16,  1840, 

■'On  goods,  wares,  and  merchandise,  except  such  as  were  sold  under 
decree  of  court,  2  per  cent;  on  sales  of  real  estate,  25  cents  on  each 
$100  of  sale,  when  rate  of  commission  was  1%  per  cent;  50  cents,  when 
rate  of  commission  was  2^  per  cent;  75  cents,  when  rate  was  3% 
per  cent;  and  $1.00  when  rate  was  5  per  cent.  All  goods,  wares,  and 
merchandise    sold   at   private    sale    were    charged   at   the    same    rates. 


44  Bulletin  of  the  University  of  Texas 

excise  tax  of  5  cents  on  every  gallon  of  spirituous  liquors  dis- 
tilled. The  act  of  February  5,  1840,  supplemented  the  pre- 
ceding act  by  levying  a  license  tax  of  $250  upon  retail  dealers  of 
spirituous  liquors  in  quantities  less  than  a  quart,  and  a  further 
charge  of  $5  for  clerk's  fee.^  In  1842  all  business  taxes  were 
reduced,  and  reduction  was  carried  farther  in  1845,  when  the 
license  tax  upon  retail  merchants  was  lowered  to  $25,  and  the 
taxes  on  gross  sales  were  repealed.^ 

The  license  required  of  one  who  engaged  in  a  taxed  occupa- 
tion was  issued  by  the  county  clerk,  who  was  authorized  to  charge 
a  fee  of  $1,  or,  in  the  case  of  a  liquor  license,  $5.  Until  1843 
he  received  also  a  commission  of  5%  upon  the  amount  of  licenses 
collected.^  In  1843,  however,  the  system  was  changed  so  that 
payment  was  made  to  the  county  treasurer  who  in  turn  issued 
a  receipt  which  entitled  one  to  receive  the  license  of  the  county 
clerk.* 

The  estimate  of  gross  sales  required  by  the  act  of  January 
16,  1840,  was  made  to  the  assessor,  and  collection  of  the  tax  was 
by  the  sheriff.  The  penalty  for  failing  to  pay  the  tax  or  make 
the  estimates  of  sales  was,  by  the  act  of  1840,  $1,000,  except  in 
the  case  of  peddlers,  when  the  penalty  was  $500,  one-half  of 
which  went  to  the  informer.  For  failure  ito  pay  the  liquor 
license  tax  the  penalty  was  $1,000  and  three  months  imprison- 
ment.**    In  1843  the  imprisonment  feature  disappeared,  and  the 


^Gammel,  op.  cit.,  vol.  2,  p.  272. 

-The  act  of  February  5,  1841,  provided  that  no  tax  should  be  levied 
on  any  peddler  whose  goods  were  grown  or  manufactured  within  the 
republic;  ibid.,  p.  577.  The  taxes  imposed  by  the  act  of  February  5, 
1842,  were:  wholesale  merchants,  billiard  tables,  and  theaters,  $100 
per  annum;  retail  merchants,  nine-pin  alleys,  public  race  tracks,  auc- 
tioneers and  money  brokers,  $50;  public  inns,  museums,  and  real 
estate,  ship,  and  merchandise  brokers,  $25;  cook  shops,  and  restaurants, 
$15;  public  boarding  houses,  $10.  Retail  merchants  handling  liquor 
were  subject  to  an  extra  license  tax  of  $25  when  sale  was  of  a  quart 
or  over  in  quantity,  and  of  $100  when  less  than  a  quart.  Auctioneers 
also  were  subject  to  a  further  tax  of  5  per  cent  upon  commissions; 
ibid.,  pp.  778-782.  The  act  of  February  3,  1845,  is  found  in  Gammel, 
op.  cit,  vol.  2,  p.  1141. 

^Act  of  December  21,  1837;   Gammel,  op.  cit.,  vol.  1,  p.  1455. 

*Act  of  January  16.  1843;  ibid.,  vol.  2,  pp.  868-9. 

'Act  of  February  5,  1840;  ibid.,  p.  272.  There  were  no  penalties  pre- 
scribed for  evasion  of  the  tax  levied  on  distilled  liquors  by  the  act  of 
January  16,  1840. 


A  Financial  History  of  Texas  45 

money  penalty  prescribed  was  one-fourth  of  the  annual  license 
tax  for  each  day  that  business  was  done  without  a  license.^  In 
1845  the  penalty  for  evasion  of  payment  became  simply  doubl<^ 
the  amount  of  the  tax.^ 

E.  The  Poll  Tax. 

A  poll  tax  of  $1  was  levied  from  1837  to  1845,  when  it  became 
50  cents.  By  the  act  of  June  12,  1837,  it  was  levied  on  all 
males,  not  slaves,  between  the  ages  of  twenty-one  and  fifty-five. 
The  act  of  January  16,  1840,  removed  the  upper  age  limit,  but 
the  act  of  February  4,  1841,  made  it  forty-five  years,  that  of 
February  3,  1845,  fifty  years.  In  1841  in  order  to  encourage 
the  formation  of  a  volunteer  company  in  each  of  the  frontier 
counties,  exemption  from  the  tax  was  extended  to  the  members.^ 
Payment  of  the  poll  tax  was  not  a  prerequisite  to  the  exercise 
of  the  suffrage,  nor  were  there  prescribed  any  penalties  for 
failure  to  paj^ 

F.  The   Characteristics  and  the   Operation  of  the  System  of 
Property  and  Bu&iness  Taxes. 

The  distinctive  features  in  the  taxation  of  property  by  the 
republic  were  the  employment  of  specific  duties,  the  fixing  of  a 
minimum  valuation  of  land,  and  the  discrimination  against  the 
property  of  non-residents  and  that  held  by  agents  or  attorneys 
for  others.  Specific  duties  and  minimum  valuations  were  de- 
signed to  do  away  with  undervaluation,  which  is  a  characteristic 
weakness  of  the  general  property  tax.  Provided  the  objects 
subject  to  specific  rates  are  of  fairly  uniform  value  and  are- 
found  by  the  assessor,  the  method  is  perhaps  the  simplest  way  of 
taxing  property.  The  property  so  taxed  by  the  republic, — 
slaves,  livestock,  pleasure  carriages,  watches,  clocks,  and  land 
certificates  might  be  expected  to  have  among  a  frontier  popula- 
tion no  very  great  inequalities  of  value  within  each  class.  Eva- 
sion of  assessment  was  the  common  practice,  however,  and  the 
method  of  applying  inelastic  specific  rates  made  the  inequalities 


^Ibid.,  p.  868. 

^Act  of  February  3,  1845;  ibid.,  p.  1141. 

■'Act  of  February  4,  1841;  ibid.,  p.  647. 


46  Bulletin  of  the  University  of  Texas 

between  individuals  assessed  and  those  not  assessed  more  bur- 
densome than  would  have  been  the  case  with  an  ad  valorem  system 
alone.^ 

Personal  property  constituted  the  most  valuable  part  of  the 
property  of  the  republic  and  contributed  the  largest  share  of 
direct  taxation.  After  1842  such  personalty  as  was  taxable  was 
subject  to  specific  rates,  with  the  exception  of  pleasure  carriages, 
money  loaned,  and  merchandise.  In  1844  the  specific  taxes  as- 
sessed amounted  to  $19,756,  the  ad  valorem  to  $22,736;  in  1845 
they  were  respectively  $21,525  and  $20,872.-  When  it  is  re- 
membered that  the  ad  valorem  receipts  included  those  from  pleas- 
ure carriages,  money  loaned,  and  sales  of  merchandise,  the  larger 
contribution  of  personal  property  is  evident. 

The  discrimination  against  the  property  of  non-residents  and 
that  held  by  agents  or  attorneys  finds  its  explanation  in  the 
hostility  of  a  frontier  people  to  absentee  capitalists,  and  to  the 
desire  that  land  should  be  put  to  use  and  not  held  as  a  specula- 
tion. Suggestions  were  frequent  that  the  tax  rate  should  pro- 
gress as  the  amount  of  land  owned  increased,  the  purpose  being 
to  make  large  landholders,  both  resident  and  non-resident,  sell 
their  holdings;  but  nothing  like  this  was  enacted.^ 

The  features  of  the  taxes  on  business  are  their  undoubted 
heaviness  upon  all  occupations  and  the  selection  of  certain 
amusements  for  particularly  burdensome  charges.     The  act  of 


^The  system  of  specific  rates  existed  in  both  Louisiana  and  Alabama, 
from  which  many  of  the  early  Texans  came.  The  similarity  between 
the  Texas  statutes  of  January  16,  1840,  and  the  Alabama  acts  of  Jan- 
uary 10,  1835,  and  January  13,  1837,  is  very  close  in  respect  to  the 
enumeration  of  property,  occupations  subject  to  license  taxes,  penalties, 
and  details  as  to  assessment  and  collection. 

-There  are  no  statistics  for  earlier  years  and  none  for  receipts. 
Those  quoted  for  1844  are  to  be  found  in  the  Telegraph  and  Texas 
Register,  January  8,  1844;  those  for  1845,  in  the  Report  of  the  Secre- 
tary of  the  Treasury,  February  15,  1846.  The  polls  assessed  for  1844 
were  8,247;   those  for  1845,  10,730. 

^The  Report  of  the  Special  Committee  of  the  Senate  on  the  Tariff, 
1838,  and  the  Report  of  the  Secretary  of  the  Treasury,  September  30, 
1841,  favored  a  progressive  rate.  The  house  committee  on  finance, 
to  whom  had  been  referred  a  bill  proposing  this  scheme,  reported  ad- 
versely on  January  5,  1844,  on  the  ground  that  it  lacked  "fairness  and 
equity";    House   Journal,   8th   Tex.  Cong.,  p.  156. 


A  Financi-al  History  of  Texas  47 

January  16,  1840,  especially  illustrates  these  charact<iris1;ies. 
Billiards,  nine-pins,  horse-racing,  card  playing,  the  theater  and 
wax  works  were  to  the  early  Texans  undesirable  amusements, 
and  the  taxes  imposed  expressed  the  disapprobation  entertained.^ 
The  commercial  or  monied  interests  were  also  regarded  as 
unproductive,  and  were  the  objects  of  some  antipathy.  The 
high  license  taxes  imposed  regardless  of  the  size  of  the  establish- 
ment, the  taxes  on  sales,  and  the  special  burdens  laid  upon 
brokers  and  auctioneers  give  evidence  of  this  feeling.-  The 
system  of  business  taxes,  however,  like  the  property  tax,  broke 
down,  especially  after  1841. 

Presidential  messages  and  treasury  and  finance  Committee 
reports  throughout  the  period  are  full  of  complaints  of  the  ill- 
working  of  the  whole  system  of  direct  taxation.  This  was  evi- 
denced also  by  the  wholesale  fashion  in  which  the  laws  were 
changed  annually  down  to  1842.  The  difficulties  experienced 
were  due  in  part  to  the  inadequacy  of  the  laws  and  in  part  to 
the  unwillingness,  and  often  to  the  inability,  of  the  people  to 
bear  the  taxes  levied.  In  the  beginning  much  land  to  which 
there  were  claimants  escaped  because  the  government  deemed 
it  inadvisable  to  open  the  land  offices.^  Land  certificates  were 
valuable  as  representative  of  land,  but  they  were  not  taxed 
until  1839.  They  were,  however,  one  of  the  most  intangible 
forms  of  property  the  assessors  had  to  deal  with,  and  evasion 


^The  Alabama  Act  of  January  5,  1837,  has  the  same  features.  It  im- 
poses, for  example,  a  tax  of  $2,000  on  every  billiard  table,  and  the  pen- 
alty for  keeping  a  table  without  a  license  was  $4,000.  Race  horses, 
public  race  tracks,  cards,  and  museums,  were  also  singled  out  for  taxes 
that  were  so  high  as  to  appear  to  have  had  a  sumptuary  purpose. 

-The  house  committee  on  finance  said  in  its  report,  December  22, 
1838:  "Repeal  or  remove  the  tariff,  and  you  will  place  the  great  and 
sterling  interests  of  the  country  in  the  hands  and  at  the  mercy  of  the 
commercial  community."  Houston,  also,  in  his  message  of  December 
20,  1841,  favored  a  diminution  of  direct  taxation,  because  it  bore  im- 
mediately upon  "the  actual  laborer  and  productive  classes."  House 
Journal,  3rd.  Tex,  Cong.,  p.  206. 

The  Alabama  act  of  Jan.  5,  1837,  suggests  the  Texas  provisions  in 
this  respect.  It  levied  a  tax  on  sales  of  merchandise,  and  though  land 
was  taxed  ten  cents  on  the  $100,  money  loaned  was  taxed  twenty-five 
cents. 

^President  Lamar's  message,  December  2,  1838. 


48  Bulletin  of  the  University  of  Texas 

was  comparatively  easy.  The  non-resident  holding  of  land  was 
on  an  enormous  scale,  and  as  the  lands  so  held  were  required 
to  be  rendered  where  the  owner  or  agent  resided,  non-rendition 
and  undervaluation  were  comparatively  easy/  The  laws  also  re- 
quired the  rendition  of  lands  by  the  owners,  and  a  remedy  for 
the  evasion  which  this  opened  up  was  sought  in  the  provision 
of  the  act  of  January  16,  1840,  which  required  that  the  county 
surveyor  should  provide  the  assessor  with  a  list  of  the  recorded 
surveys  in  the  county.  This  provision  was  repealed,  however, 
in  1841  and  the  old  method  of  self-assessment  with  the  absence 
of  system  in  reaching  owners  was  restored.  The  fact  that  the 
population  was  widely  scattered  made  the  visits  of  the  assessor 
and  the  collector  difficult,  and  these  officers  usually  waited  in 
vain  for  the  taxpayer  to  present  himself  for  submission  to  a 
tax  w^hich  no  less  a  person  than  Henry  Smith,  secretary  of  the 
treasury  under  Houston,   characterized   as   ''odious."^ 

There  were  defects  in  the  system  of  collection.  The  sheriff 
performed  this  task  of  collection  of.  taxes  in  addition  to  his 
other  duties.  He  was  frequently  derelict  not  only  in  making 
collections  but  also  in  making  returns  to  the  treasury  of  what 
he  had  collected.^  It  was  suggested  that  collectors  should  be 
appointed  by  the  central  government  and  subject  to  its  rules, 
and  therefore  not  amenable  to  local  considerations,  but  though 
urged  by  both  presidents  Houston  and  Jones,  the  plan  was  not 
adopted.* 

The  frontier  counties  were  in  a  state  of  almost  continuous 


'The  statistics  for  resident  and  non-resident  holdings  are  not  avail- 
able for  any  year  of  the  republic,  but  those  for  1848  are  near  enough 
to  the  period  to  be  representative.  The  distinction  between  resident 
and  non-resident  refers  to  ownership  outside  of  the  county,  and  not 
necessarily  to  ownership  by  one  who  is  not  a  resident  of  the  state. 
In  1848  the  acres  owned  by  residents  were  17,807,643,  valued  at  $13,- 
798,320;  those  owned  by  non-residents,  20,980,796,  valued  at  $10,813,835; 
Comptroller's  Report,   1848-1849. 

'Telegraph  and   Texas   Register,   January  2,   1839. 
•  ^President  Houston's  message,  December  12,  1843. 

^Report  of  the  Secretary  of  the  Treasury,  November  1,  1842.  Mes- 
sage of  President  Houston,  December  12,  1843.  Message  of  President 
Jones,  December  16,  1844.  Telegraph  and  Texas  Register,  December  6, 
1843. 


A 


A  Financmi  History  of  Texas  49 

eonfusion  OMnng  to  Indian  and  Mexican  depredations,  with 
resulting  loss  and  insecurity  of  property,  and  it  was  often  ina- 
bility to  pay  due  to  these  conditions  that  accounted  for  the 
failure  to  pay  taxes. ^ 

The  use  of  the  principle  of  a  minimum  valuation  of  land  was 
an  incentive  to  evasion,  for  the  minimum  was  undoubtedly  too 
high.  From  1840  to  1842  it  was  $1.00  per  acre,  after  1842  it 
was  fifty  cents  an  acre.  These  taxes  were  more  than  the  value 
of  land  taken  on  the  average,  considering  the  fact  that  land 
could  be  freely  had  by  all  immigrants.-  There  was  also  a  great 
amount  of  land  scrip  on  the  market,  which  fact  served  further  to 
depress  the  value  of  land.  Much  of  the  deeded  land  also  was 
unoccupied  and  Avas  producing  nothing,  and  the  taxes  upon  it 
were  a  decided  burden.  The  consequence  was  that  where  such 
land  was  assessed,  the  taxes  were  not  paid,  and  arrears  to  an 
enormous  amount  accumulated.  The  total  direct  taxes  assessed 
for  the  four  years  1837-1840  were  $639,219,  and  of  this  amount 
there  remained  unpaid  in  1841  the  sum  of  $337,592.^  During 
the  three  years  1842-1844  there  was  a  total  direct  tax  assessed 
of  $168,257,  of  which  amount  there  remained  unpaid  in  1846 
the  sum  of  $78,614.  Thus  of  the  total  taxes  assessed,  most  of 
which  was  on  land,  over  fifty  per  cent  remained  unpaid. 

Of  the  total  revenue  of  the  republic,  direct  taxes  contributed 
20.1%,  license  taxes,  4.1%.  Down  to  1842  the  proportion  was 
somewhat  higher,  that  of  direct  taxes  being  24.7%,  that  of  li- 
cense taxes,  4.4%.     The  receipts   from  property  and  business 


'Finance  Committee  Report,  January  21,  1841;  House  Journal  5tli 
Tex.  Cong.,  app.,  p.  405.  Telegraph  and  Texas  Register,  November  30, 
1842.  The  act  of  December  21,  1838,  exempted  the  resident  citizens 
of  some  six  frontier  counties  from  land  taxation,  and  the  act  of  Jan- 
uary 22,  1845,  exempted  the  citizens  of  three  counties  from  the  pay- 
ment of  all  direct  taxes  due  up  to  the  passage  of  the  bill;  Gammel, 
op.  cit.,  vol.  2,  pp.  11,  1071.     Gouge,  Fiscal  History  of  Texas,  p.  142. 

-Under  the  more  secure  and  prosperous  conditions  of  1848  the  as- 
sessed value  of  land  averaged  63  cents  an  acre.  This  was  perhaps  less 
than  its  full  value,  by  how  much  cannot  be  said,  but  it  points  to  the 
conclusion  that  the  minimum  valuations,  if  not  greater  than  the  real 
value,  were  quite  up  to  its  limit. 

'Statement  in  the  Telegraph  and  Texas  Register,  August  18,  1841, 
based  on  returns  on  file  in  the  office  of  the  commissioner  of  revenue. 

4— H 


50  Bulletin  of  the  University  of  Texas 

taxes  for  1841  were  the  largest  of  any  year,  and  this  increase 
•can  be  accounted  for  by  the  marked  increase  in  rates  made  by 
the  act  of  January  16,  1840.  This  increase  in  rates  operated 
over  the  years  also  of  largest  expeditures  and  greatest  issue  of 
treasury  notes,  and  was  defended,  as  was  the  increase  in  cus- 
toms duties  at  the  same  time,  as  necessary  in  order  to  adapt 
the  receipts  of  the  government  to  the  condition  of  inflated  prices. 
Under  Houston's  second  administration  there  was  a  reaction 
against  the  high  direct  and  business  taxation  as  there  was 
against  the  other  policies  of  Lamar.  Houston  believed  that  di- 
rect taxes  bore  especially  hard  upon  the  farming  class,  and  he 
recommended  a  repeal  of  the  law  authorizing  the  penalty  of 
double  taxes,  the  reduction  of  the  direct  tax  by  one-half,  and  the 
payment  of  all  taxes  in  gold,  silver  or  ''paper  of  unquestionable 
character.  "^  The  reduction  that  was  made  by  congress  in  the 
act  of  February  5,  1842,  exceeded  his  reconunendation,  but 
payment  was  required  in  the  kinds  of  money  recommended. 
The  years  following  these  changes  show  a  negligible  revenue  from 
direct  and  license  taxes.  It  is  doubtful  if  the  reduction  in  rates 
made  any  change  in  the  weight  of  the  taxes,  on  account  of  the 
^changed  requirement  as  to  tender.  The  result  was  an  increasing 
amount  of  arrears,  and  the  practical  breaking  down  of  the  sys- 
tem.^  Of  the  receipts  from  1841  to  1846,  direct  taxes  contrib- 
uted 12.8%,  as  compared  with  24.7%  for  the  period  before  1842, 
and  license  taxes,  3.7%  as  compared  with  4.1%.  Acts  extending 
the  time  for  the  collection  of  taxes  were  passed  in  1840  and  the 
years  following,  but  it  is  not  apparent  that  they  succeeded  in 
inducing  payments,  and  they  remain  as  legislative  evidence  of 
the  prostration  of  the  system. 


^Message  of  December  20,  1841.  The  Telegraph  and  Texas  Register 
of  January  12,  1842,  said  that  the  adoption  of  the  president's  sugges- 
tion would  increase  the  existing  rates  to  nearly  three  times  their  "in- 
trinsic value,"  and  that  "the  people  would  be  overwhelmed  by  the 
burden."     See  also  Yoakum,  History  of  Texas,  vol.  2,  p.  348. 

^Messages  of  Houston,  June  27,  1842,  and  December  12,  1843.  Tele- 
•graph  and  Texas  Register,  November  30,  1842,  and  February  22,  1843. 
For  the  year  1843,  of  $49,000  assessed  only  $13,000  was  collected: 
Toakum,  op.  cit,  vol.  2,  p.  435.  Of  a  total  assessed  in  1842  and  1843 
of  $111,771,  only  $58,196  was  collected;  Telegraph  and  Texas  Register, 
January  8,  1845. 


A  Financial  History  of  Texas  51 

G.     Land  and  Land  Dues. 

The  estimated  area  of  Texas  at  the  beginning  of  the  rep\iblic 
was  242,594,560  acres,  and  the  most  of  this  vast  area  was  not 
only  unoccupied  but  unclaimed.  Land  was  the  one  thing  in 
which  Texas  was  rich,  and  the  policy  which  was  followed  in  the 
disposal  of  it  is  an  interesting  study,  but  only  the  outlines  of  the 
policy  can  be  given  here.^ 

The  policy  of  rewarding  service  in  the  army  and  navy  which 
had  been  adopted  by  the  provisional  government  was  continued 
under  the  republic-  In  order  to  put  an  end  to  the  conflicts 
in  preceding  laws  in  defining  bounties  for  service,  the  acts  of 
December  4  and  14,  1837,  provided  that  those  who  had  served 
for  three  months  should  receive  320  acres;  for  six  months,  640 
acres;  for  nine  months,  960  acres;  for  twelve  months  or  more, 
1280  acres.^  Warrants  issued  for  bounty  lands  were  called 
"bounty  warrants."  Additional  grants  were  made  to  those 
who  had  participated  in  the  conflicts  of  the  Texas  Revolution 
and  to  all  who  had  become  incapacitated  for  labor  in  the  service 
of  the  republic*  The  warrants  issued  for  these  grants  were 
called  "donation  warrants." 

The  policy  begun  during  the  Mexican  period  of  granting  land 
free  to  immigrants  was  also  continued  under  the  republic.  The 
constitution  of  the  republic  contained  the  provision  that  every 
head  of  a  family  residing  in  Texas  on  the  day  of  the  declaration 
of  Texas  independence  should  be  entitled  to  one  league  (4428 
acres)  and  one  lahor  (177  acres)  of  land,  and  that  every  single 
man  of  the  age  of  seventeen  and  above  should  be  entitled  to 
one-third  as  much.  All  who  came  to  Texas  between  March  2  and 
August  1.  1836,  and  volunteered  for  the  army  within  that  period 
were  treated  in  a  like  manner.^  Certificates  issued  in  accord- 
ance with  these  provisions  were  called  "first  class  certificates." 
It  was  enacted  in  1836  that  those  who  had  immigrated  after  the 
declaration  of  Texas  independence  and  prior  to  October  1,  1837, 


^See  Wooten,  A  Comprehensive  History  of  Texas,  vol.  1,  pp.  748-848. 
J.  and  H.  Sayles,  Laws  of  Texas  relating  to  Real  Estate,  vol.  1,  passim. 
='Gammel,   op.   cit.,  vol.    1,  pp.   1094,   1323,    1412. 
»Ibid.,  pp.  1368,  1404. 

*Ibid.,  p.  1435.     Ibid.,  p.  1450.     Laws  of  1860,  p.  117. 
"^Ibid.,  p.  1414. 


52  Bulletin  of  the  University  of  Texas 

should  receive,  if  the  head  of  the  family,  1280  acres;  if  a  single 
man,  640  acres;  but  it  was  required  that  the  grantee  be  a  resi- 
dent of  the  republic  for  three  years  and  that  he  pay  land-office 
fees  and  expenses  of  survey/  Certificates  issued  in  accordance 
with  the  terms  of  this  act  were  called  "second  class."  Free 
grants  were  discontinued  by  the  act  of  June  12,  1837,  to  become 
effective  October  1,  but  this  policy  was  short  lived,  and  the  act 
of  January  4,  1839,  and  January  4,  1841,  provided  that  heads 
of  families  should  receive  640  acres  and  single  men  above  seven- 
teen years  of  age,  320  acres.^  Certificates  issued  to  those  im- 
migrating between  October  1.  1837,  and  January  1,  1840,  were 
called  "third  class,"  and  those  to  persons  coming  in  between 
January  1,  1840,  and  January  1,  1842,  were  called  "fourth 
class."  The  same  conditions  of  residence  in  the  republic  and 
payment  of  fees  attached  to  these  certificates  as  attached  to 
second  class  certificates.  The  act  of  January  4,  1841,  required 
the  immigrant  to  reside  upon  the  land  for  three  years,  cultivating 
not  less  than  ten  acres,  but  this  condition  was  repealed  by  the 
act  of  February  4,  1842.^  Though  this  method  of  giving  away 
land  was  discontinued  in  1841,  another  method  was  introduced.* 
The  old  policy  of  making  contracts  for  the  colonization  of  fami- 
lies w^as  reintroduced  in  1841.^  Colonists  received  640  or  320 
acres,  according  as  they  were  married  or  single;  and  the  con- 
tractor, or  the  one  responsible  for  the  introduction  of  the  colo- 
nists,  received  6,400  acres  for  every  one  hundred  families  and 
3,200  acres  for  every  one  hundred  single  men  introduced.  The 
law  was  repealed  in  1844,  but  under  it  contracts  had  been  made 
with  several  colonizers,  and  4,494,806  acres  were  given  to  colo- 
nists and  contractors.^ 

The  homestead  donation  policy  had  its  beginning  in  Texas  with 
the  act  of  December  21,  1838,  which  granted  160  acres  of  land 
to  settlers  along  the  military  road  from  the  Red  River  to  the  Rio 


qbid.,  p.  1283. 

=Ibid.,  p.  1323.     Ibid.,  vol.   2,   pp.  35,  554. 
«Ibid.,  vol.  2,  p.  777. 
^Ibid.,  vol.  1,  p.  1324. 
"Ibid.,  vol.  2,  p.  555. 

"Land  Office  Report,  1910-12,  p.  24.     Wooten,  op.  cit.,  vol.  1,  p.  824. 
Gammel,  op.  cit.,  vol  2,  p.  958.     Sayles,  op.  cit.,  vol.  1,  pp.  182-206. 


A  Financial  History  of  Texas 


53 


Grande.^  The  conditions  were  settlement  and  two  years  cul- 
tivation. In  1841  grants  were  made  for  settlement  along  the 
northern  military  road,  but  with  the  condition  of  five  years 
settlement.^ 

In  addition  to  the  above  ways  of  disposing*  of  the  public  do- 
main, a  liberal  land  endowment  of  public  educatioji  was  pro- 
vided. By  the  acts  of  January  26,  1839,  and  February  5,  1840, 
four  leagues  (17,712  acres)  were  given  to  each  county  for  the 
establishment  of  a  primary  school;  and  fifty  leagues  (221,400 
acres)  were  set  apart  for  the  establishment  and  endowment  of 
two  universities.^ 

It  was  liot  a  feature  of  the  land  policy  of  the  republic,  how- 
ever, to  make  land  grants  in  aid  of  internal  improvements.  The 
only  subsidy  in  land  which  was  given  appears  to  have  been 
to  the  surveyors  and  commissioners  of  the  ''Central  National 
Koad  of  the  Republic  of  Texas,"  which  was  a  turnpike  projected 
to  extend  from  the  Trinity  River  near  the  mouth  of  Elm  Fork 
to  the  Red  River  opposite  the  junction  with  the  Riamisha.* 
The  road  was  never  built,  but  the  state  parted  with  27,000 
acres  for  the  purpose.^ 

Beneficiaries  of  the  republic  accepted  land  as  headrights, 
bounties,  donations,  subsidies,  and  so  forth,  but  the  creditors  of 
the  republic  were  not  so  ready  to  accept  land  in  discharge  of 
their  claims.  The  act  of  1841  which  permitted  the  creditors 
of  the  republic  to  exchange  their  claims  for  land  scrip  at  the 
rate  of  $2.00  an  acre  was  repealed  in  1845.**  The  Triplett  and 
Erwin  loans  were  so  discharged  in  1837  and  1838,  and  in  1844 
a  debt  of  $54,408  to  Thomas  McKinney  and  S.  L.  Williams  was 
paid  in  land  scrip. 

The  revenue  derived  from  lands  came  from  fees  and  from 
the  sale  of  land  scrip  and  town  lots.  The  grantees  under  the 
laws  of  the  Mexican  period  paid  the  fees  prescribed  by  the  laws 
of  Coahuila  and  Texas.     These  were  for  those  who  immigrated 


'Gammel,  op.  cit.,  vol.  2,  p.  17. 

^'Ibid.,  p.  536. 

^^Ibid.,  pp.  134,  320. 

nbid.,  p.  1013. 

^Land  Office  Report,  1908-10,  p.  25. 

«Gammel,  op.  cit.,  vol.   2,  pp.   624,   1210. 


54  Bulletin  of  the  University  of  Texas 

prior  to  May  2,  1835,  $3.50  for  each  labor  (177  acres)  of  irri- 
gable land,  $2.50  for  each  labor  of  arable,  and  $1.20  for  each 
labor  of  pasture  land;  for  those  who  came  in  between  May  2, 
1835,  and  March  2,  1836,  the  amounts  of  the  dues  were  double.^ 
The  republic  did  not  continue  this  system  of  charges  for  the 
grants  made  after  March  2,  1836,  but  adopted  a  system  of  gov- 
ernment and  patent  fees.  As  prescribed  by  the  act  of  December 
22,  1836,  the  government  fees  varied  from  $1.00  to  $3.00,  ac- 
cording to  the  size  of  the  survey  plot,  and  the  patent  fees  varied 
from  $5.00  for  one  league  and  tabor  to  $3.00  for  one  labor.  The 
price  of  surveying  was  fixed  at  $3.00  for  every  lineal  mile.^ 
In  1841  the  patent  fees  were  increased  to  $15.00  for  each  patent 
for  one  league  or  more ;  for  more  than  one- third  of  a  league  and 
less  than  one  league,  $10.00;  and  for  one-third  of  a  league  and 
less,  $5.00.^ 

In  1836  agencies  were  established  in  Mobile,  Ala.,  and  New 
Orleans  for  the  sale  of  land  scrip  in  denominations  of  320  and 
640  acres.  The  conduct  of  the  agents  and  their  lack  of  success 
excited  the  displeasure  of  President  Houston  and  upon  his  rec- 
ommendation the  further  sale  of  scrip  was  prohibited.*  The 
amount  of  scrip  sold  by  the  agents  was  estimated  at  1,220,387 
acres.'^  In  the  pre-emption  act  of  1845  the  commissioner  of  the 
general  land  office  was  authorized  to  sell  land  scrip  to  any  actual 
settler  for  $2.00  an  acre  payable  in  the  evidences  of  debt  of  the 
republic  or  for  fifty  cents  an  acre  payable  in  par  funds.  The 
east  end  of  Galveston  Island  was  sold  for  $50,000 ;  and  the  rest 
of  the  island,  the  east  end  of  Matagorda  Island,  and  the  townsite 
of  Austin  were  sold  in  lots  or  small  tracts. 

The  pre-emption  policy  was  adopted  in  1845,  though  before 
this  the  actual  settler  had  had  preference  right  of  location  of  his 


^Gammel,  op.  cit,  vol  1,  p.  1276;  vol.  2,  p.  1078. 

=Ibid.,  vol.  1,  1276. 

•Ibid.,  vol.   2,  p.  467. 

*Act  of  December  10,  1836;  ibid.,  vol.  1,  p.  1133.  Joint  Resolution, 
December  10,  1836;  ibid.,  p.  1136.  Act  of  December  14,  1837;  ibid.,  p. 
1400.  Message  of  President  Houston,  November  21,  1837.  Texas  Diplo- 
matic Correspondence,  vol.  1,  p.  196. 

'Gouge,  Fiscal  History  of  Texas,  p.  280.  The  scrip  issued  amounted  to 
1,329,200   acres;    Land  Office  Report,   1908-10,   p.  23. 


A  Financial  History  of  Texas  55 

certificate  under  certain  conditions.^  Under  the  law  of  January 
22,  1845,  a  person  who  had  settled  upon  and  improved,  or  whc 
should  thereafter  settle  upon  and  improve  any  unappropriated 
part  of  the  public  land,  had  the  right  within  three  years  from 
the  beginning  of  his  settlement  to  locate,  if  head  of  a  family, 
any  valid  land  certificate  not  to  exceed  320  acres,  if  single,  160 
acres,  in  preference  to  all  other  claimants.  The  pre-emptor  was 
required  to  make  oath  that  he  believed  he  had  settld  upon  vacant 
land.  In  lieu  of  any  other  valid  land  certificate,  he  could  pur- 
chase at  the  land  office  a  certificate. 

The  '' boundless  revenue"  which  President  Houston  thought 
would  arise  from  the  opening  of  the  land  offices  did  not  ma- 
terialize.- Of  the  total  receipts  of  the  republic,  those  from  land 
and  land  dues,  including  town  lots,  constituted  about  15%, 
and  town  lots  account  for  about  one-half  of  this.^  The  large 
increase  which  took  place  in  1840  is  due  mainly  to  the  sale  of 
town  lots  on  Matagorda  Island  and  in  Austin.*  During  1840 
and  1841  also  the  depreciated  treasury  notes  were  receivable 
at  par  for  all  payments  on  account  of  land,  and  this  fact,  ta- 
gether  with  the  increase  in  patent  fees  in  1841,  helps  to  expiaim 
the  large  receipts  of  these  two  years.  There  are  no  statistics  for- 
receipts  after  1841,  and  their  absence  is  perhaps  explained  by- 
the  act  of  December  27,  1842,  which  granted  an  extension  ©£ 
time  for  the  payment  of  land  dues  to  January  1,  1846.^  The 
general  land  office  was  established  by  the  act  of  December  22, 
1836,  but  the  opening  of  it  was  postponed  from  time  to  time, 
and  it  was  not  opened  until  the  spring  or  summer  of  1844.^ 


^Gammel,  op.  cit.,  vol.    2,  pp.   1073,  554. 

'Message  of  November  21,  1837.  The  first  general  land  office  was  at 
Houston  from  June,  1837,  to  September  of  October,  1839;  Land  Office 
Report,  1908-10,  pp.  25-28. 

^The  proportion  of  the  total  given  in  the  table  is  14  per  cent,  but  as; 
some  land  dues  are  included  among  the  direct  tax  receipts  of  the  three 
years  ending  September  30,  1838,  and  among  the  miscellaneous  receipts- 
of  1839,  the  proportion  is  perhaps  nearer  15  per  cent  than  14  per  cent. 

"According  to  Gouge,  Fiscal  History  of  Ttxas,  p.  270,  the  amount  de- 
rived from  town  lots  in  1840  was  $168,797.  He  includes,  however,  some 
receipts  from  direct  and  license  taxes,  and  these  have  been  excluded: 
from  the  amount  given  in  table  I,  Appendix. 

^'Gammel,  op.  cit.,  vol.  2,  p.  996. 

"Sayles,   op.   cit.,  p.    450. 


56  Bulletin  of  the  University  of  Texas 

H.     Miscellaneous  and  Unclassified  Receipts. 

Except  for  the  year  1839,  the  receipts  of  a  miscellaneous  char- 
acter were  negligible.  The  receipts  for  this  year  were  large 
because  it  was  not  found  possible  to  classify  the  amount  de- 
rived from  taxes  and  land,  and  could  these  be  allowed  for,  the 
really  miscellaneous  receipts  would  be  small.  Of  the  amount 
given  for  the  three  years  ending  September  30,  1838,  $3,195  is 
from  sale  of  prizes  captured  by  the  navy.  The  chief  source  of 
miscellaneous  receipts  was  probably  fines  and  forfeitures.  A 
postal  service  was  maintained  by  the  republic,  but  no  revenue 
was  reported  from  it.  On  the  contrary,  it  was  kept  going  with 
difficulty  even  with  appropriations  of  other  revenues.^ 

/.     Character  of  Receipts. 

The  bulk  of  the  receipts  from  taxes  and  other  sources  was 
in  the  form  of  treasury  notes  and  audited  drafts.  It  was  only 
at  the  end  of  the  period  that  specie  to  any  important  amount 
was  received.^  Audited  drafts,  or  unpaid  warrants  drawn  on 
the  treasury,  were  receivable  for  direct  taxes  down  to  1842,  and 
for  land  fees  throughout  the  entire  period.  Auditors'  certifi- 
cates, representing  the  government's  indebtedness  to  those  who 
carried  the  mails,  assessors'  drafts,  or  warrants  drawn  in  favor 
of  assessors  in  payment  for  the  work  of  assessment,  and  drafts 


'Houston  in  his  message  of  December  4,  1844,  said  that  the  amount 
appropriated  for  sustaining  the  post  office  during  his  second  adminis 
tration  was  only  $29,000  while  under  Lamar  it  was  $252,917.  See  also 
Gammel,  op.  cit.,  vol.  1,  p.  1256. 

*In  1842  only  $3  of  specie  was  received,  and  a  balance  of  $17.44 
carried  over  from  1841  was  jealously  retained  in  the  treasury  through- 
out 1842.  Gouge  (p.  274)  says  that  previous  to  the  adoption  of  the 
exchequer  note  system  (1842)  the  records  do  not  disclose  that  the 
government  ever  realized  one  dollar  of  its  taxes  in  specie.  Specie  re- 
ceipts from  1842  to  February  19,  1846,  were,  according  to  Gouge,  $10,- 
440.  This  is  by  no  means  the  true,  or  even  approximately  true, 
amount,  however,  for  the  practice  of  the  treasury  after  1841  of  designat- 
ing as  "par  funds"  paper  received  at  par  as  well  as  specie  makes  it 
impossible  to  tell  how  much  of  either  was  actually  received.  Such 
par  funds  amounted,  according  to  Gouge,  to  $275,420  from  1842  to  1846, 
and  some  specie  is  included  in  another  unclassified  item  of  $70,005; 
Gouge,  op.  cit.,  p.  273. 


A  Financial  History  of  Texas  57 

issued  by  special  acts  of  congress,  were  receivable  for  direct 
taxes  after  1842. 

Treasury  notes,  including  both  the  "red-backs"  issued  before 
1842  and  the  exchequer  bills  issued  in  1842  and  thereafter,  made 
up  the  largest  part  of  the  receipts.^  After  1843  the  old  issues 
of  notes,  or  those  before  1842,  were  not  receivable  for  taxes, 
except  in  payment  of  arrears,  and  the  new  issues  were  receivable 
only  at  their  current  market  rates.- 

The  other  forms  which  receipts  took  were  bonds  and  land  scrip, 
but  they  constituted  only  a  small  part  of  the  receipts.-^  Bank 
notes  were  for  a  short  time  receivable,  but  it  does  not  appear  that 
any  found  their  way  into  the  treasury  in  payment  of  taxes  or 
fees.'' 

/.     Local  Taxes. 

Owing  to  the  lack  of  statistics  of  any  kind,  nothing  can  be 
given  in  regard  to  county  and  other  local  taxes  except  the  pro- 
visions in  the  laws.  The  act  of  December  20,  1836,  provided 
that  the  county  board  of  commissioners  should  levy  a  tax  suffi- 
cient to  meet  the  requirements  of  their  respective  counties,  the 
tax  to  be  levied  upon  the  same  persons  and  property,  and  assessed 
and  collected  by  the  same  officers  and  in  the  same  manner,  as  the 
state  tax.^  By  the  act  of  January  16,  1840,  the  county  tax  could 
not  exceed  one-half  of  the  state  tax,  and  by  the  act  of  February  4, 
1841,  it  could  not  exceed  one-fourth.^  There  were  no  limitations 
on  other  local  taxes  until  1841,  when  it  was  provided  that  they 


^Of  the  $2,182,657  given  by  Gouge  as  the  total  receipts  from  1835  to 
1851,  $919,425  was  definitely  in  treasury  notes,  and  of  the  $388,047 
unclassified,  there  were  certainly  enough  notes  to  make  the  total  re- 
ceipts in  this  form  over  $1,000,000. 

^'Gammel,  op.  cit.,  vol.  2,  pp.  727,  744. 

^According  to  Gouge,  $50,100  of  the  funded  debt  and  $7,336  of  land 
scrip  were  received;   op.  cit.,  p.  273. 

*Gouge,  op.  cit.,  p.  274.  The  act  of  October  4,  1836,  made  the  notes 
of  any  bank  making  loans  to  the  republic  receivable  for  all  public  dues; 
but  the  act  of  December  14,  1837,  prohibited  their  receipt  for  customs 
duties,  and  this  prohibition  was  renewed  by  the  act  of  May  9,  1838. 
After  1841  they  were  not  receivable  in  any  payments  to  the  govern- 
ment. 

•Gammel,  op.  cit.,  vol.  1,  p.  1206. 

•Ibid.,  vol.   2,  pp.  200,  577. 


58  Bulletin  of  the  University  of  Texas 

should  not  exceed  the  county  tax.^  From  this  restriction  to  one- 
fourth  of  the  state  taxes,  the  towns  of  Matagorda,  Houston,  Gal- 
veston,  and   San   Antonio   wer6   excepted  in   1844.^ 


^Ibid.,  p.  578. 
^Ibid.,  p.  942. 


Chapter  3. 

the  public  debt.* 

Upon  the  establishment  of  the  permanent  government  in 
October,  1836,  the  public  debt  wa^  estimated  at  $1,250,000;  in 
1846,  the  estimated  amount  was  nearly  $10,000,000;  and  the 
amount  for  which  provision  was  made  in  1852  and  thereafter 
was  nearly  twelve  million  dollars.  The  explanation  of  this  in- 
crease is  to  be  found  in  the  preceding  accounts  of  expenditure 
and  revenue.  The  fact  that  the  largest  part  of  the  principal  of 
the  debt  was  in  the  form  of  audited  drafts,  treasury  notes,  and 
bonds  representing  the  funding  of  floating  liabilities,  is  evidence 
of  the  excess  of  expenditures  over  receipts.  The  funded  debt 
would  have  been  larger  if  the  efforts  of  the  republic  to  negotiate 
a  foreign  loan  had  been  successful.  The  early  Texans  over- 
estimated the  credit  of  their  government,  and  their  disillusion- 
ment soon  followed.  The  following  is  a  descriptive  account  of 
the  debt : 

A.     Ten  Per  Cent  Bonds  of  fhe  Five  Million  Dollar  Loan  Acts. 

One  of  the  first  measures  of  the  First  Texas  Congress  was 
to  authorize  the  president  to  negotiate  a  loan  not  to  exceed  five 
million  dollars.  The  terms  offered  to  lenders  were  10%  interest, 
and  payment  in  not  more  than  thirty  nor  less  than  five  years. 
If  any  bank  should  become  an  original  purchaser  of  the  bonds, 
its  notes  would  be  receivable  in  payment  of  all  public  dues  to  the 
amount  of  the  purchase.  A  purchaser  had  the  privilege  also  of 
taking  at  any  time  the  amount  of  his  loan  in  land  at  the  minimum 
government  price.  For  the  punctual  payment  of  the  interest 
and  the  final  redemption  of  the  loan,  the  public  faith,  the  pro- 
ceeds of  the  sales  of  public  domain,  and  all  taxes  on  land  after 
1838,  were  pledged.-     Two  commissioners  were  sent  to  the  United 


^The  public  debt  is  the  real  theme  of  Gouge's  Fiscal  History  of 
Texas,  but  his  work  is  incomplete  in  that  it  does  not  extend  beyond 
1851. 

^Act  of  November  18,  1836;   Gammel,  op.  cit.,  vol.  1,  pp.  1092-3. 


60  Bulletin  of  the  University  of  Texas 

States  to  place  the  loan,,  but  they  met  with  no  success.^  In 
May,  1838,  another  act  was  passed  modifying  slightly  the  pro- 
visions of  the  first  measure.  It  provided  that  the  bonds  should 
be  written  in  such  foreign  languages  as  might  be  required  and 
that  the  interest  should  be  payable  in  such  currency  as  might 
be  stipulated.  The  public  faith  was  the  only  security  extended, 
but  a  supplementary  act  of  January  22,  1839,  pledged  in  addi- 
tion as  much  of  the  revenues  as  might  be  necessary  to  meet  the 
semi-annual  interest.  A  sinking  fund  also  was  to  be  established, 
but  in  other  respects  the  acts  were  alike. ^  In  January,  1840, 
provision  was  made  for  a  sinking  fund  which  was  to  be  con- 
stituted of  the  proceeds  from  the  sale  of  the  public  lands,  or, 
should  the  public  lands  not  be  brought  on  the  market,  from  other 
revenue.  The  fund  was  to  amount  to  $300,000,  although  "noth- 
ing was  to  prevent  the  government  from  applying  a  larger  sum." 
It  was  to  be  used  in  purchases  of  the  bonds  at  their  market  price, 
and,  in  order  that  the  remotest  contingency  might  be  guarded 
against,  it  was  provided  that  "should  the  premium  reach  fifty 
per  cent  beyond  par,  the  holders  shall  be  required  on  application 
of  said  agents  to  surrender  and  cancel  the  same  on  the  payment 
of  par  value  and  said  premium."^ 

In  the  fall  of  1839  the  commissioners  succeeded  in  placino-  a 
part  of  the  bonds  with  the  Pennsylvania  Bank  of  the  United 
States.  The  amount  obtained,  for  which  10%  sterling  bonds 
were  given,  was  $457,380.*  With  this  advance  as  a  testimonial 
that  the  republic  enjoyed  credit  in  the  United  States,  one  of 
the  commissioners,  General  James  Hamilton,  went  to  Europe  and 
visited  the  Hague,  London,  Paris,  and  Brussels.  President 
Tvamar  reported  in  November  12,  1839,  that  the  prospects  of 
obtaining  the  full  loan  were  "cheering  and  satisfactory,"  and 


^Messrs.  Gilmer  and  Burnley  were  the  first  commissioners.  In  1839 
James  Hamilton  was  appointed  commissioner  to  succeed  Gilmer.  Presi- 
dent Houston  in  his  message  of  Nov.  21,  1837,  ascribes  the  failure  of 
the  commissioners  up  to  that  time  to  the  unfavorable  condition  of  the 
money  market  in  the  United  States.  See  also  Texas  Diplomatic  Cor- 
respondence, vol.  1,  pp.  Ill,  171,  196,  224,  225,  267. 

=Gammel,  op.  cit.,  vol.  1,  pp.  1484-7;  vol.  2,  pp.  62-3.  Texas  Diplo- 
matic Correspondence,  vol.  1,  p.  267. 

^Gammel,  op.  cit,  vol.  2,  pp.  230-233. 

^Report  of  the  Auditor  and  Comptroller,  December  27,  1849, 


A  Financial  History  of  Texas  61 

the  expectation  of  success  undoubtedly  led  to  its  anticipation  in 
an  enlarged  scale  of  expenditures.  The  loan  was  the  one  topic 
of  exciting  interest  in  the  republic  during  1840  and  1841,  and 
what  would  be  its  disposition  was  a  subject  of  much  discussion. 
The  plan  of  using  the  proceeds  to  establish  a  great  national  bank 
was  perhaps  the  most  popular.^  Success  was  indeed  very  near  in 
the  summer  of  1841,  for  the  banking  house  of  Lafitte  and  Com- 
pany of  Paris  was  on  the  point  of  opening  its  books  to*  the  flota- 
tion of  the  loan,  when  the  French  minister  of  finance  came  out  in 
a  semi-official  note  hostile  to  the  proposition.-  Until  1843  hope 
was  entertained  by  the  Texas  loan  conuuissioners  that  the  French 
government  would  aid  in  floating  the  loan.  It  was  believed  that 
mere  recognition  by  France  and  England  of  the  independence 
of  Texas  would  enable  Texas  to  get  all  the  money  she  desired.' 
The  duties  on  French  wines  imported  into  Texas  were  abolished 
by  proclamation  for  three  years  to  win  the  favor  of  France,  and 
France  could  have  secured  for  her  guarantee  of  a  loan  the  com- 
mercial privileges  which  Texas  had  granted  to  the  United  States."* 
Hope  of  securing  the  guarantee  of  the  French  government  to  the 
loan  was  given  up  in  1843.  An  opinion  adverse  to  the  guarantee 
was  declared  to  the  French  government  by  M.  de  Saligny,  the 
representative  in  Texas  of  that  government.^  M.  de  Saligny 's 
motives  in  rendering  an  adverse  opinion  have  been  questioned  on 
account  of  the  difficulty  over  the  assault  of  his  servant  by  Mr. 
Bullock,   an  Austin  hotel  keeper,   and   also  on  account  of  the 


^Telegraph  and  Texas  Register,  January  16,  1841;  Gouge,  op.  cit., 
pp.  96-8.  Gouge  (p.  140)  explains  the  loan  by  the  Pennsylvania  Bank 
of  the  United  States  as  intended  to  aid  General  Hamilton's  efforts  in 
Europe,  the  idea  of  the  bank  being  that  the  proceeds  would  be  used  to 
establish  a  national  bank  in  Texas  which  would  act  in  co-operation 
with  the  Pennsylvania  institution.  Also  Texas  Diplomatic  Corres- 
pondence, vol.  3,  p.  1287. 

-The  terms  of  Lafitte  and  Company,  the  note  of  the  French  minister, 
and  the  communication  of  General  Hamilton  are  published  in  the  Tele- 
graph and  Texas  Register,  June  30,  July  7,  and  July  28,  1841.  See 
also  extracts  from  French  newspapers  in  Maillard,  The  History  of  the 
RepuUic,  pp.  399-409. 

^Texas  Diplomatic  Correspondence,  vol.  1,  p.  413. 

'Texas  Diplomatic  Correspondence,  vol.  3,  pp.  878,  1283,  1285,  1287, 
1336,  1405,  1406,  1433,  1410,  1422. 

'Ibid.,  pp.   1427,  1431. 


62  Bulletin  of  the  Vniversity  of  Texas 

failure  of  M.  de  Saliguy  to  secure  extensive  land  grants  for  him- 
self and  associates.^  The  failure  of  Texas  to  place  the  loan  any- 
where would  lead  one  to  believe  in  the  sincerity  of  M.  de  Saligny 's 
opinion  to  his  government. 

The  loan  agents  turned  from  France  again  to  London,  and 
Germany  also  was  sounded,  but  all  without  avail.-  The  panic  of 
1837  was  a  most  inopportune  event  for  the  Republic  of  Texas, 
for  it  is  probable  that  if  there  had  been  no  panic  the  bonds  of  the 
republic  would  have  been  taken  up  in  Europe  by  the  optimistic 
buyers  of  American  stocks.  But  the  panic  caused  a  tight  money 
market  for  a  long  period ;  and  the  repudiation  by  some  states  of 
the  United  States  of  their  obligations  and  the  failure  of  the 
states  to  meet  on  time  the  interest  payments  on  their  bonds 
brought  American  securities  into  great  disrepute  among  European 
investors. 

The  inability  of  the  commissioners  to  sell  any  bonds  abroad, 
the  little  success  which  attended  similar  efforts  in  the  United 
States,  and  the  failure  of  the  government  to  meet  its  existing 
obligations  led  to  the  repeal  in  January,  1842,  of  the  laws  au- 
thorizing the  five  million  loan,"^  and  in  January,  1844,  to  a  repeal 
of  all  laws  authorizing  the  president  to  negotiate  a  loan  either 
upon  the  public  faith  or  upon  the  basis  of  the  public  lands.* 

The  principal  and  interest  of  the  loan  from  the  Pennsylvania 
Bank  of  the  United  States  were  $960,498  on  July  1,  1850,  at 
which  date,  according  to  the  act  of  February  11,  1850,  interest 
liability  ceased.''     As  this  debt  was  secured  by  a  pledge  of  import 


^The  correspondence  between  Saligny  and  the  Texas  government  is 
given  in  Texas  Diplomatic  Correspondence,  vol.  3,  p.  1289  et  seq. 
Gouge,  op.  cit.,  p.  111. 

'Texas  Diplomatic  Correspondence,  vol.    3,  pp.   1449,  1467,  1481. 

•Gammel,  op.  cit.,  vol.  2,  p.  703.  In  his  message  of  December  20,  1841, 
President  Houston  said:  "We  are  not  only  without  money,  but  without 
credit,  and  for  want  of  punctuality,  without  character." 

*Gammel,  op.  cit.,  vol.  2,  p.  954.  In  addition  to  the  two  five  million 
loan  acts,  there  were  the  act  of  December  10,  1836,  authorizing  the 
president  to  borrow  $20,000;  the  act  of  January  22,  1839,  authorizing  a 
loan  of  $1,000,000,  and  the  sinking  fund  act  of  January  14,  1840,  which 
empowered  the  commissioners  to  issue  bonds  to  the  amount  of  seven 
million  dollars,  if  necessary.  See  also  Texas  Diplomatic  Correspond- 
ence, vol.  3,  p.  1482. 

"Report  of   the  Comptroller,   1855. 


A  Financial  History  of  Texas  .  63 

duties,  it  fell  within  the  provisions  of  the  acts  of  Congress  of 
September  9,  1850,  and  February  28,  1855.  In  its  act  of  Jan- 
uary 31,  1852,  Texas  provided  that  this  debt  should  be  settled 
out  of  the  $5,000,000  of  United  States  bonds  reserved  in  the 
United  States  Treasury  on  the  basis  of  87  45/100  cents  on  the 
dollar,  this  being  the  rating  given  it  in  the  auditorial  report  of 
1851.  However,  under  the  pro-rata  arrangement  proposed  in 
the  act  of  Congress  of  February  28,  1855,  and  accepted  by  Texas 
February  1,  1856,  it  was  adjusted  on  the  basis  of  76  9/10  cents 
on  the  dollar.^ 

Another  debt  of  the  republic  which  was  represented  by  bonds 
issued  under  the  five  million  loan  acts  w^as  the  so-called  naval 
debt.  In  accordance  with  the  act  of  November  4,  1837,  a  con- 
tract was  made  in  November,  1838,  with  Frederick  Dawson,  of 
Baltimore,  for  vessels  which  were  received  in  1839.  The  original 
contract  price  w^as  $280,000,  payable  in  one  year,  but  double  that 
amount  if  payment  should  not  be  made  at  maturity.  Payment 
was  not  made  at  maturity,  and  the  two  10%  bonds  of  $280,000 
each  put  up  as  a  forfeit  with  the  Girard  Bank  of  Philadelphia 
were  turned  over  to  Mr.  Dawson.^  In  1839.  also,  the  Steamer 
''Zavalla"  was  purchased  of  James  Holford  and  associates  for 
$97,953.50,  on  terms  similar  to  the  Dawson  purchase ;  and  failure 
to  pay  at  maturity  resulted  in  the  forfeiture  of  10%  bonds  to 
the  amount  of  $195,907.  The  principal  of  the  naval  debt  with 
interest  to  July   1,   1850,   amounted   to   $1,622,404.70.^     Texas 


^Act  of  January  31,  1852;  Gammel,  op.  cit.,  vol.  3,  p.  916.  Act  of 
February  1,  1856;  ibid.,  vol.  4,  p.  227.  Act  of  Congress  of  September 
9,  1850;  U.  S.  Statutes  at  Large,  IX,  ch.  49,  p.  446.  Act  of  Congress 
of  February  28,  1855;  ibid.,  X,  ch.  129,  p.  617.  See  also  House  Misc. 
Doc.  No.  17,  33d  U.  S.  Cong.,  2nd  Sess.  Serial  No.  807.  A  bill  to  make 
up  the  difference  between  what  Texas  acknowledged  to  be  due  and 
what  was  received  was  passed  by  the  senate  a^id  house  of  the  Sixth 
Legislature,  but  owing  to  a  decision  of  the  house  that  it  required  a 
two-thirds  majority,  the  bill  was  lost.  Governor  Pease  recommended 
in  his  message  of  November  2,  1857,  the  settlement  of  the  difference 
($101,383.14),  and  a  bill  was  introduced,  but  the  senate  committee  on 
the  public  debt  recommended  its  indefinite  postponement;  Senate 
Journal,  7th  Leg.,  p.  139. 

^Report  of  the  Auditor  and  Comptroller,  December  27,  1849,  and  No- 
vember 12,   1851. 

'Report    of   the   Comptroller,   1855. 


64  Bitlletin  of  the  University  of  Texas 

rated  this  debt  at  fifty  cents  on  the  dollar,  but  as  the  bonds  were 
secured  by  a  pledge  of  import  duties  they  were  paid  out  of  the 
$7,750,000  reserved  in  the  United  States  Treasury  on  the  basis 
of  76  9/10  cents  on  the  dollar.^ 

The  above  bank  and  naval  debts  were  what  may  be  designated 
the  "foreign  debt"  of  the  republic.  There  was,  besides,  a  large 
domestic  debt,  which  was  also  largely  held  by  non-residents  at 
the  time  of  settlement. 

B.     Audited  Drafts  and  Audited  Claims. 

The  domestic  debt  was  incurred  in  meeting  the  ordinary  ex- 
penditures of  the  government,  although  there  may  be  some  ques- 
tion about  calling  ordinary  the  expenditures  on  account  of  Indian 
and  Mexican  depredations.  This  debt  was  originally  in  the  form 
of  audited  drafts  and  treasury  notes,  but  afterwards  bonds  were 
issued  to  fund  the  floating  liabilities  and  to  meet  appropriations. 

All  except  $100,000  of  the  $1,250,000  debt  handed  down  by  the 
government  ad  interim  was  in  the  form  of  treasury  orders  or 
audited  drafts,  representing  treasury  obligations  for  supplies 
for  the  army  and  navy,  for  pay  of  officers  and  men,  and  for  civil 
purposes.^  Such  of  these  as  had  been  issued  for  cash  advanced 
or  for  supplies  furnished  prior  to  March  1,  1836,  bore  interest  at 
8%.  The  amount  of  this  description,  however,  was  only  $59,- 
468.43.^  This  continued  to  be  the  main  form  which  domestic 
indebtedness  took  until  the  issue  of  treasury  notes  began  in 
November,  1837. 

Including  $6,980.06  issued  by  the  General  Council  in  1835  and 
1836,  the  total  issue  of  drafts  up  to  December  31,  1837,  was 
$1,220,438.21.  The  amount  redeemed  during  the  period,  either 
by  receipt  in  payments  of  public  dues  or  by  drafts  on  agents  in 
the  United  States,  appears  to  have  been  only  $24,822.  Their 
specie  value  in  May,  1837,  was  about  fifteen  cents  on  the  dollar.* 
To  meet  this  situation  the  act  of  June  7,  1837,  was  passed,  au- 


'Report  of  the  Auditor  and  Comptroller,  December  27,  1849,  and  No- 
vember 12,  1851.  Acts  of  January  31,  1852,  and  February  1,  1856.  See 
also  House  Misc.  Document,  No,  17;  loc.  cit. 

-Morfit  to  Forsyth,  September  4,  1836;   loc.  cit. 

^Report  of  the  Auditor  and  Comptroller,  September  30,  1836;  House 
Journal,  1st  Tex.  Cong.,  First  Sess.,  p.  23. 

*Gouge,  op.  cit.,  p.  267. 


A  Financial  History  of  Texas  65 

thorizing  the  consolidation  and  funding  of  the  public  liabilities. 
Claims  against  the  government,  after  having  been  properly 
audited,  were  received  at  par  in  exchange  for  10%  bonds,  and 
no  interest  was  to  be  allowed  on  claims  other  than  those  funded.^ 
The  amount  of  audited  drafts  funded  under  the  provision  of  this 
act  was  $755,151.68.-  The  amount  of  drafts  issued  to  the  be- 
ginning of  Lamar's  administration  was  $2,105,896.82;  during  his 
presidency  of  three  years  the  amount  issued  was  $4,881,093.47, 
while  during  Houston's  second  term  and  Jones'  administration 
the  amount  was  only  $694,791.81.^  These  figures  best  illustrate 
the  policy  of  expenditures  followed  by  the  several  administra- 
tions. The  total  amount  issued  from  the  beginning  of  the  gov- 
ernment to  February  19,  1846,  when  the  period  of  the  republic 
ends,  was  $7,681,782.10.  In  addition  to  the  $755,151.68  funded 
in  the  10%  bonds  of  the  act  of  June  7,  1837,  $45,600  was  funded 
in  the  10%  bonds  authorized  by  the  act  of  February  5,  1840.  Of 
the  balance,  $5,985,131.21  was  paid  at  the  treasury,  almost  wholly 
in  promissory  notes  or  treasury  bonds ;  $'639,061.15  was  received 
in  the  collection  of  revenue  and  destroyed,  $74,441.26  was  filed 
with  the  auditor  and  comptroller,  and  $182,396.80  was  outstand- 
ing on  September  1,  1851.^ 

Until  June  12,  1837,  audited  drafts  were  received  by  the  gov- 
ernment in  payment  of  all  dues  and  taxes,  but  by  the  act  of  that 
date  they  were  declared  to  be  not  a  tender  for  taxes  on  retailers 
of  liquor,  billiard  tables,  nine-pin  alleys,  and  like  games;  and  by 
the  act  of  December  14,  1837,  they  became  no  longer  receivable 
for  customs  duties.'^'  By  the  act  of  January  16,  1840,  they  again 
became  receivable  for  all  direct  and  license  taxes,  but  after  Feb- 
ruary 1,  1843,  they  were  not  a  tender  for  taxes,  except  in  the 
case  of  arrears  incurred  before  that  date.*^  There  were  in  1844, 
however,  special  acts  of  congress  which  provided  for  the  issue 


'Gammel,  op.  cit.,  vol.  1,  pp.  1301-3. 

-Reports  of  auditor  and  comptroller,  December  27,  1849,  and  No- 
vember 12,  1851.  The  amount  given  in  the  reports,  and  repeated  by 
Gouge,  is  $835,500,  but  it  includes  $80,348.32  which  does  not  represent 
properly   audited  drafts  funded. 

'Gouge,  op.  cit.,  p.  267. 

^Report  of  the   Auditor  and  Comptroller,  November   12,   1851. 

"Gammel,  op.  cit.,  vol.  1,  pp.  1322,  1309. 

«Ibid.,  vol.   2,  p.   727. 

5— H 


€6  Bulletin  of  the  University  of  Texas 

of  a  small  amount  of  drafts  that  were  receivable  for  direct  taxes, 
and  in  some  cases,  for  customs.  Throughout  the  period  of  the 
republic  audited  drafts  were  receivable  in  payment  of  land  dues, 
and  the  act  of  February  11,  1850,  provided  that  audited  paper 
could  be  exchanged  for  land  certificates  at  the  rate  of  fifty  cents 
an  acre.^  If  originally  acceptable  for  that  purpose,  they  were 
received  by  the  state  in  payment  of  arrears  of  taxes  due  the 
republic,  and  small  amounts  continued  to  be  received  for  land 
dues  and  taxes  at  the  treasury  as  late  as  1859.^ 

Audited  drafts  were  warrants  drawn  by  the  auditor  and  comp- 
troller of  the  republic  upon  its  treasury,  pursuant  to  the  appro- 
priation acts.  There  was,  however,  a  large  amount  of  claims 
which  never  reached  during  the  period  of  the  republic  the  stage 
of  being  audited,  and  the  auditor  and  comptroller  of  the  state 
were  authorized  to  pass  upon  them  by  the  act  of  March  20, 
1848,  which  provided  for  the  ascertainment  of  the  debt  of  the 
republic.  The  legislature  itself  passed  special  acts  from  time  to 
time  acknowledging  the  legitimacy  of  certain  claims.  In  passing 
upon  these  claims  for  services  or  supplies  furnished,  the  practice 
was  followed  of  assigning  to  each  claim,  as  far  as  was  possible,  its 
par  value  at  the  time  the  service  was  rendered  or  the  supplies 
were  furnished.^  From  1852,  when  payment  first  began,  to  1902, 
the  date  of  the  last  payment,  there  was  paid  on  account  of  this 
character  of  debt,  $1,576,214.29.  Of  this  amount,  however,  $288,- 
263.16  was  discharged  by  being  received  by  the  treasury  in  the 
collection  of  revenue.* 


^Ibid.,  vol.  3,  p.  636.  This  act  was  intended  to  absorb  the  audited 
paper  of  the  republic. 

-Act  of  January  23,  1850;  ibid.,  p.  504.  The  comptrollers'  reports 
-do  not  separate  in  the  receipts  audited  paper  and  treasury  notes,  so 
it  is  not  possible  to  classify  the  respective  amounts  of  each  received. 
The  total  liabilities  of  the  republic  received  from  February  19,  1846, 
to  1860,  after  which  time  they  cease  to  appear,  amounted  to  $289,110.86. 

^Act  of  March  20,  1848,  sec.  2;  Gammel,  op.  cit.,  vol.  3,  p.  208.  Re- 
port of  the  Auditor  and  Comptroller,  December  27,  1849. 

*The  appropriation  acts,  except  the  act  of  January  31,  1852,  do  not 
separate  principal  and  interest.  The  statement  of  the  amount  paid 
does  not  distinguish,  therefore,  the  principal  from  the  interest  pay- 
ments. 


A  Financial  History  of  Texas  67 

C.     Treasury  Notes. 

The  history  of  paper  money  has  been  enriched  by  the  experi- 
ence of  the  Eepublic  of  Texas  Excessive  issue,  depreciation  to 
the  point  of  worthlessness,  old  and  new  tenors,  varying  tender 
qualities,  and,  in  fact,  every  phase,  except  that  of  a  legal  tender 
between  individuals,  was  illustrated.  The  notes  were  of  three 
different  kinds:  ten  per  cent  interest  notes,  called  "star 
money";  those  not  bearing  interest,  called  "red-backs";  and 
exchequer  bills/ 

The  act  of  June  9,  1837,  started  Texas  upon  her  tempestuous 
experience  with  pa^er  money.  It  authorized  and  required  thie 
president  to  issue  the  promissory  notes  of  the  government  to 
the  amount  of  $500,000,  in  denominations  of  not  less  than  $1 
nor  more  than  $1,000,  payable  twelve  months  after  date,  and 
drawing  interest  at  10%.  There  w^ere  pledged  for  their  re- 
demption one-fourth  of  the  proceeds  of  the  sales  of  Galveston 
and  Matagorda  islands,  500,000  acres  of  land,  all  improved 
forfeited  lands,  and  the  faith  and  credit  of  the  government. 
The  notes  w-ere  to  be  paid  out  only  for  the  expenses  of  the 
civil  departments  of  the  government,  except  $100,000  for  the 
purchase  of  horses  and  munitions  of  war,  and  they  were  re- 
ceivable in  all  payments  to  the  government.^  President  Hous- 
ton's explanation  of  this  issue  was  that  Texas  had  just  come 
out  of  a  war  of  independence  and,  to  quote  his  own  words, 
"the  struggle  had  left  us  destitute  and  naked.  There  were  no 
banks,  there  was  no  money;  our  lands  could  not  be  sold,  and 
the  public  credit  was  of  doubtful  character.  To  avoid  the 
absolute  dissolution  of  the  government,  it  became  necessary 
to  resort  to  some  expedient  that  might  furnish  temporary  relief. 
This  could  be  only  effected  by  creating  a  currency  that  should 
command  some  degree  of  credit  abroad,  .  .  .  such  articles 
in  the  market  of  the  United  States  as  were  indispensable  to 
the  country."^ 


^The  interest  notes  were  so  called  because  of  a  five  pointed  star  in 
tjie  center  of  the  face  of  the  notes.  The  non-interest  notes  were  called 
"red-backs"  because  of  their  red  ground;  Crane,  Life  and  Select  Lit- 
erary Remains  of  Sam  Houston,  pp.  158,  162. 

-Gammel,  op.  cit.,  vol.  1,  p.  1309. 

'Message  of  May  12,  1838;    House  Journal,   2nd  Tex.  Cong.,   p.   119. 


6S  Bulletin  of  the  University  of  Texas 

9  ^ 

The  notes  were  not  immediately  issued,  because  the  secretary 
of  the  treasury,  Henry  Smith,  thouj^ht  the  law  authorizing 
them  conflicted,  first,  with  a  previous  law  of  June  7,  1837,  which 
in  providing  for  the  funding  of  the  public  debt  pledged  the 
revenues  from  customs  and  direct  taxation  to  meet  the  interest 
on  the  same,  and,  second,  with  the  later  tariff  act  of  June  12, 
1837,  which  provided  that  duties  should  be  paid  in  specie  or 
such  current  bank  paper  as  the  authorities  might  direct.  As 
the  success  of  the  funding  scheme  would  depend  on  payment 
of  interest  in  specie,  and  as  the  customs  were  looked  to  for 
this  specie,  the  secretary  thought  the  provision  making  the 
notes  receivable  for  all  government  dues  would  result  simply 
in  the  substitution  of  one  form  of  debt  for  another.  He  bowed, 
however,  to  the  "dictation  of  the  chief  executive,"  and  the 
notes  appeared  about  November  1.^ 

On  December  14, 1837,  there  were  authorized  "change  notes," 
or  treasury  notes  of  small  denominations,  to  an  amount  not 
exceeding  $10,000,  and  an  additional  issue  of  $150,000  of  other 
treasury  notes,  if  required,-  Also  the  issue  by  individuals  of 
printed  or  lithographed  notes  was  prohibited,  and  customs 
duties  were  made  payable  only  in  specie  or  treasury  notes.^ 

The  amount  of  printed  interest  notes  issued  down  to  January 
15,  1838,  was  $514,510.-'  They  were  not  reissued,  and  they 
experienced  little  or  no  depreciation.^  They  were  succeeded 
by  the  "engraved  interest  notes,"  whose  issues  from  January 
15  to  November  3,  1838,  amounted  to  $436,289,  and  from  No- 
vember 3,  1838,  to  January  1,  1839,  to  $214,340."    The  amount 


'Statement  of  the  secretary,  November  16,  1837,  in  compliance  with 
a  resolution  of  the  house;  House  Journal,  2nd  Tex.  Cong.,  p.  139.  After 
the  notes  were  issued,  the  secretary  instructed  the  collectors  of  the 
ports  not  to  receive  them,  but  he  was  compelled  by  the  president  a 
week  later  to  make  the  order.  The  exact  date  of  the  appearance  of  the 
notes  has  not  been  ascertained,  but  the  Telegraph  and  Texas  Reg- 
ister, March  17,  1838,  in  its  chronology  of  the  events  of  the  second 
year  of  independence,  puts  the  issue  under  the  date  of  November  1, 
1837. 

*Gammel,  op.  cit,  vol.  1,  pp.  1387,  1393. 

•Ibid.,  pp.  1389,  1309. 

*Gouge,  op.  cit.,  p.  268. 

•Report  of  the  Auditor  and  Comptroller,  December  27,  1849. 

•Gouge,  op.  cit.,  p.  268. 


A  Financial  History  of  Texas  69 

in  circulation  on  September  30,  1838,  was  $684,069.59,  or 
$34,069.59  above  the  amount  which  had  been  contemplated  by 
the  government;^  and  on  November  3,  1838,  the  estimated 
amount  in  circulation  was  $812,454.-  A  bill  to  increase  the 
issue  to  $1,000,000  was  vetoed  by  President  Houston  on  May 
12,  1838,  on  the  ground  that  such  an  amount  would  destroy 
the  value  of  the  notes  and  defeat  their  original  purpose;  but 
he  signed  on  May  18,  1838,  a  bill  that  called  for  the  "reissue 
and  continued  reissue"  of  the  notes  until  an  appropriation  of 
$450,000  should  be  met.^  ^ 

Depreciation  set  in  soon  after  the  appearance  of  the  engraved 
notes  and  by  April,  1838,  amounted  to  fifty  per  cent  in  New 
Orleans,  while  in  Texas  they  were  circulating  at  from  65  c«nts 
to  85  cents  on  the  dollar."^  The  current  prices  of  commodities 
at  this  time  were  high,  but  they  were  scarcity  prices  rather 
than  inflated  ones.^ 

With  the  advent  of  the  Lamar  administration  in  December, 
1838,  a  new  chapter  in  the  history  of  the  notes  began.  The 
interest  notes  were  succeeded  by  the  "red-backs,"  or  non- 
interest  notes,  authorized  by  the  act  of  January  19,  1839.^ 
Further  additions  were  authorized  by  the  act  of  February  5, 


^Report  of  the  Secretary  of  the  Treasury,  September  30,  1838.  Tele- 
graph and  Texas  Register,  November  17,  1838.  The  secretary  stated 
"that  exigencies  of  the  time  demanded  their  deviation"  from  the 
amount  the  government  regarded  as  expedient,  to  be  kept  in  cir- 
culation. 

^Gouge,  op.  cit.,  p.  269. 

"■Veto  message;  House  Journal,  2nd  Tex.  Cong.,  p.  119;  Gouge,  op. 
cit.,  pp.  79,  80.  The  president  stated  in  the  veto  message  that  the  out- 
standing amount  up  to  that  time  had  not  exceeded  $500,000.  Crane 
(op.  cit.,  p.  162)  erroneously  says  that  the  act  authorizing  the  increase 
was  passed  over  the  veto.  For  act  of  May  18,  1838,  see  Gammel, 
op.  cit.,  vol.  1,  p.  1492.  An  act  of  November  16,  1838,  required  the 
issue  of  $100,000  of  notes  already  authorized  to  be  expended  for 
military  purposes  exclusively.      Ibid.,  vol.  2,  p.  4. 

*Compare  (Lester),  The  Life  of  Sam  Houston,  p.  191.  Gouge,  op. 
cit.,  p.  79. 

'See  list  of  prices.  Appendix,  table  6. 

•Gammel,  op.  cit.,  vol.  2,  p.  51.  The  notes  first  issued  under  this  act 
bore  interest.  The  non-interest  notes  did  not  appear,  it  seems,  until 
about  February  27.     See  act  of  February  28,  1840;   ibid.,  p.  310. 


70  Bulletin  of  the  University  of  Texas 

1840,  increasing  the  amount  of  "change  notes"  to  $150,000, 
and  by  the  act  of  February  5,  1841,  which  placed  no  other  limit 
on  issues  of  red-backs  than  the  amount  of  appropriations  to 
be  met.^ 

.  Although  the  outstanding  circulation  at  the  close  of  Houston's 
administration  was  over  $800,000,  he  had  stood  for  restriction 
of  issue.  Under  Lamar,  however,  there  was  no  restriction  of 
amount.  From  January  1,  1839,  there  were  $1,569,010  of  notes 
issued,  and  from  September,  1839,  to  September,  1840,  $1,983,- 
790,  or  a  total,  not  including  reissues,  of  $3,552,800.^  The 
estimated  outstanding  circulation  was  on  September  30,  1839, 
$2,013,762,  and  on  September  30,  1841,  $2,920,860.75.^  The 
occasion  of  this  enormous  increase  was  the  reckless  policy  of 
expenditures  followed  by  the  Third  and  Fourth  congresses.* 

The  revenues  of  the  government  came  to  be  paid  entirely 
in  the  form  of  its  paper  liabilities,  and  the  system  of  direct 
taxation  broke  down  when  the  people  had  before  them  the 
example  of  the  easy  way  in  which  the  government  provided 
itself  with  funds.  The  five  million  dollar  loan  was  a  delusion 
entertained  throughout  the  years  1839,  1840,  and  1841,  and 
the  feeling  was  that  its  negotiation  would  be  the  panacea  for 
all  the  ills  the  republic  suffered.  Lamar,  who  was  familiar 
with  the  general  history  of  paper  money,  said  in  his  message 
of  December  21,  1838,  that  the  first  issues  of  Texas  had  an- 
swered a  valuable  purpose  as  a  temporary  expedient,  ''but 
experience  admonishes  us  that  to  iirge  it  further,  or  continue  . 
it  longer,  would  be.  equally  injudicious  and  prejudicial."  He 
favored,  therefore,  as'  a  permanent  expedient,  a  national  bank, 
because  it  would  confer  ''many  eminent  and  continued  bless- 


^Ibid.,  pp.   364,  574. 

=Gouge,  op.  cit.,  p.  268. 

^Reports  of  the  secretary  of  the  treasury,  1839  and  1841.  Accord- 
ing to  Gouge  the  outstanding  circulation  on  September  30,  1840,  was 
$3,287,962.42,  but  he  includes  in  this  amount  treasury  bonds.  The 
note  circulation  proper  is  not  ascertainable,  unless  one  deducts  the 
total  of  treasury  bonds  issued  during  1840  and  1841  from  the  figure 
given  by  Gouge.  The  amount  thus  obtained  is  $2,438,062.  Making  al- 
lowance for  bond  issues  made  in  1841,  it  is  safe  to  infer  that  the  treas- 
ury notes  outstanding  amounted  to  over  $2,500,000. 

*Anson  Jones,  Republic  of  Texas,  p.  32. 


A  Financial  Histm-y  of  Texas         '  71 

ings,"  among  which  was  ''entire  freedom  from  the  odious  and 
too  often  impertinent  surveillance  of  the  tax  gatherers/'  The 
specie  required  for  the  establishment  of  this  bank  was  to  be 
derived  from  the  expected  loan.  But  the  bank  scheme  was 
succeeded  in  Lamar's  mind  by  the  expedition  to  Santa  Fe,  and 
it  was  undertaken,  he  said,  *' because  if  the  commerce  and 
natural  wealth  of  that  section  could  be  directed  to  the  republic 
...  it  would  do  more  to  revive  the  drooping  finances  than 
any  financial  theory  that  might  be  devised  for  a  quarter  of  a 
century  to  come."^  With  such  visionary  ideas  as  these  en- 
gaging the  mind  of  the  executive,  and  with  an  extravagant 
congress,  there  is  little  wonder  that  the  ship  of  the  Republic 
of  Texas  went  on  the  rocks. 

The  first  issues  of  the  red-backs  were  valued  only  at  about 
37.5  cents  on  the  dollar;  in  November.  1840,  they  had  fallen- 
to  16.66  cents;  and  at  the  close  of  Lamar's  administration  in- 
November,  1841,  they  varied  from  12  to  15  cents.^  The  New- 
Orleans  quotations  w^ere  for  July  7,  1841,  11  to  13  cents;  for 
September  22,  13  to  15  cents ;  for  November  24,  12  to  13  cents ; 
for  December  15,  10  to  12  cents ;  and  for  January  5,  1842,  8  to 
11  cents.^  After  1839  the  notes  ceased  to  circulate  as  a  medium 
of  exchange  and  became  merely  objects  of  speculation.  The 
government  did  not  recognize  the  depreciation  until  the  fall 


'Message  of  November  3,  1841;    Executive  Record,  No.  39. 

-Report  of  the  Auditor  and  Comptroller,  December  27,  184ff,  giVes 
the  depreciation  at  the  date  of  issue  and  for  November,  1841.  The  de- 
preciation in  1840  is  given  in  House  Journal,  5th  Tex.  Cong.  First  Sess., 
pp.  43,  127,  and  in  the  Telegraph  and  Texas  Register,  December  3,  1840. 
The  Register  of  this  issue  stated  that  the  continued  contradictory 
statements  about  the  French  loan  were  believed  to  keep  the  notes 
fluctuating. 

^  Reported  in  Telegraph  and  Texas  Register.  The  depreciation  can 
not  be  followed  in  the  prices  of  commodities  in  the  Houston  market,, 
for  after  1839  the  quotations  are  specie  prices.  The  market  prices  in 
18S9  were  paper  prices,  and  if  we  construct  a  simple  arithmetical  index 
number  based  on  the  prices  of  ten  commodities  quoted  on  September 
1,  1838,  the  number  for  December  25,  1839,  is  221,  or  an  increase  in 
prices  of  nearly  two  and  one-fourth  fold.  See  schedule  of  prices  in 
Appendix.  See  also  Texas  Diplomatic  Correspondence,  vol.  1,  p.  537; 
/     vol.  3,  p.  1368. 


72  Bulletin  of  the  University  of  Texas 

of  1840,  when  it  paid  them  out  at  the  prevailing:  rates  of  dis- 
count.^ 

An  act  of  February  5,  1840,  provided  for  the  funding-  of  the 
notes  in  bonds  which  bore  10%  and  8%  interest  and  which  were 
redeemable  after  June  30,  1845.  Notes  presented  before  July 
1,  1840,  were  fundable  in  10%.  bonds;  after  July  1  in  8%.- 
This  was  a  short  lived  measure,  however,  for  it  was  repealed  in 
1841.^  It  was  next  provided  that  the  holders  of  notes  or  any 
other  liquidated  claim  against  the  government  might  exchange 
the  same  for  land  scrip  at  the  price  of  $2.00  per  acre.*  More 
stringent  measures  for  sustaining  the  value  of  the  currency  were 
suggested,  but  it  is  to  the  credit  of  the  Texans  that  they  were 
not  adopted.^  The  notes  could  not  be  made  a  legal  tender  be- 
tween individuals  because  of  the  provision  in  the  constitution 
which  provided  that  ''nothing  but  gold  and  silver  shall  be  made 
a  lawful  tender."^ 

The  end  of  the  interest  notes  and  red-backs  came  in  January, 
1842,  when  they  lost  their  legal  tender  powder  in  payments  of 
customs,  direct  and  license  taxes.  They  remained,  however,  a 
tender  for  land  dues  and  for  arrears  of  taxes  previously  as- 
sessed.'    They  immediately  sank  in  value,  being  current  at  from 


^House  Journal,  5th  Tex.  Cong.,  p.  41.  Report  of  Auditor  and  Comp- 
troller, December  27,  1849.  Congressional  Globe,  33d  U.  S.  Congress, 
2nd  Session,  appendix,  p.   159. 

^Gammel,  op.   cit.,  vol.  2,  pp.   453-4. 

•Ibid.,  p.  639. 

*Act  of  February  5,  1841;   ibid.,  p.  624. 

"^In  the  Third  Congress  a  bill  was  introduced  in  the  house  providing 
for  a  stay  of  execution  for  twelve  months  unless  treasury  notes  should 
be  taken  in  payment.  The  committee  to  whom  this  bill  was  referred, 
reported  on  January  5.  1839,  that  it  deemed  the  bill  "not  only  uncon- 
stitutional, but  highly  impolitic  and  inexpedient."  At  this  same  ses- 
sion a  bill  also  was  reported  adversely  which  sought  to  compel  the 
officers  of  the  government  to  receive  the  notes  for  all  amounts  due 
them,  but  an  act  was  passed  January  19,  1839,  compelling  them,  the 
chief  justice  and  district  judges  excepted,  to  receive  the  notes  in  pay- 
ment of  "all  dues  and  appurtenances  of  their  offices."  Gammel,  op. 
<;it.,  vol.  2,  p.  81. 

*Art.  II,  sec.  2.  See  also  Rice  v.  Powell,  reported  in  Dallam,  413 
(1841). 

^Gammel,  op.  cit.,  vol.  2,  p.  727. 


A  Financial  History  of  Texas  73 

ten  cents  to  two  cents  on  the  dollar,  and  having  no  value  at  all 
in  many  parts  of  the  state.^ 

$3,945,500  was  the  total  amount  of  notes  issued,  not  including 
reissues  and  exchanges  of  new  notes  for  old,  from  November  1, 
1837,  to  September,  1840,  after  which  no  new  issues  of  the  above 
kinds  were  made.-  Of  this  amount  $770,080  was  funded  in  the 
10%  bonds  and  $22,800  in  the  8%  bonds  authorized  by  the  act 
of  February  5,  1840.^  Up  to  September  1,  1851,  $518,324  had 
been  received  in  the  collection  of  revenue  and  destroyed.  There 
was  due  by  collectors  and  "likely  to  be  paid  over,"  $129,750; 
filed  with  the  auditor  and  comptroller  $2,201,193,  leaving  out- 
standing, $296,353.*  As  a  result  of  the  paper  being  filed  with 
the  auditor  and  comptroller  and  of  its  payment  to  the  state  for 
arrears  of  taxes  and  land  dues  owing  the  republic  the  amount 
outstanding  was  reduced  to  $90,023  on  October  31,  1853.^  Pay- 
ments in  them  continued  to  be  made  to  the  state  treasury  as  late 
as  1859,  and  those  that  were  not  so  paid  in  were  probably  lost 
or  destro3^ed. 

In  the  adjustment  of  this  portion  of  the  public  debt,  the 
rating  given  to  the  first  issue,  or  the  10%  printed  notes,  was 
par.  This  was  done  because  their  issue  ceased  before  any  de- 
preciation had  taken  place,  and  it  was  considered  that  the  gov- 
ernment had  received  full  value  for  them.^  To  the  second 
issue,  or  the  10%  engraved  notes,  a  rating  of  fifty  cents  on  the 
dollar  was  given,  which  was  the  average  value  estimated  to  have 
been  received  by  the  government,  owing  to  their  speedy  deprecia- 
tion after  issue.'  The  non-interest  notes  or  red-backs  were  given 
a  rating  of  twenty-five  cents  on  the  dollar.     The  principle  fol- 


'Gouge,  op.  cit.,  p  117.  Crane,  op.  cit.,  p.  163.  New  Orleans  quota- 
tions, as  reported  in  the  Telegraph  and  Texas  IJ^eglster,  were  on  Feb- 
ruary 2,   1842,  5  to  8  cents,   on  May  9,  4  to  6  cents. 

-The  total  given  in  the  Auditor  and  Comptroller's  report  of  December 
27,  1849,  is  $4,717,939,  but  this  includes  $772,439  stated  to  have  been 
redeemed  at  the  treasury.  As  this  reduction  was  effected  by  giving 
new  notes  for  old,  the  net  issue  is  as  above  given. 

'Report  of  the  Auditor  and  Comptroller,  December  27,  1849. 

♦Report  of  the  Auditor  and  Comptroller,  November  12,  1851. 

•Report  of  the  Comptroller,  1852-3. 

•Report  of  the  Auditor  and  Comptroller,  December  27,  1849. 

Ubid. 


74  Bulletin  of  the  University  of  Texas 

lowed  in  this  rating  was  to  ascertain  what  the  notes  were  valu(id 
at  when  last  paid  out,  but  as  this  was  impossible  in  the  case 
of  the  engraved  interest  notes  and  the  red-backs,  what  was  done 
was  to  strike  an  average  of  the  depreciation.  For  example,  in 
the  case  of  the  red-backs,  the  value  was  37^2  cents  when  issued 
and  12%  cents  at  the  end  of  1841,  the  average  being  25  cents.^ 
These  notes  were  a  part  of  the  revenue  debt,  however,  and, 
therefore,  came  within  the  provisions  of  the  acts  of  Congress 
of  September  9,  1850,  and  February  28,  1855.  Adjustment 
finally  took  place  on  the  basis  of  76  9-10  cents  on  the  dollar 
under  the  provisions  of  the  above  act  of  February  28,  1855, 
and,  the  assenting  act  of  Texas  of  February  1,  1856.  The  par 
amount  of  each  kind  with  interest  to  January  1,  1841,  for  which 
payment  was  made  in  1856  was: 

10%  printed  notes $      65,208.33 

10%   engraved  notes 451,708.32 

Red-backs 2,199,728.64 

Total    $2,716,645.29^ 

Scaled  to  76  9-10  cents  on  the  dollar  this  amount  was  $2,089,- 
100.22. 

The  currency  that  succeeded  the  red-backs  was  a  treasury 
note  that  went  by  the  name  of  "exchequer  bill."  The  act  which 
repealed  all  the  laws  authorizing  the  issue  and  reissue  of  the 
old  notes  and  their  reception  for  taxas  authorized  the  president 
to  issue  exchequer  bills  to  an  amount  not  exceeding  $200,000. 
They  were  in  denominations  of  from  $5  to  $100,  and  were  payable 
on  demand.^  No  pledge  was  given  for  their  redemption,  but 
it  was  made  the  duty  of  the  collectors  of  the  revenue  to  redeem 
them  with  any  sptcie  on  hand.  They  were  simply  demand 
notes,  and  it  was  expected  that  their  value  would  be  sustained 
by  the  provision  making  them  the  only  paper  receivable  for  taxes, 
and  by  limiting  the  amount  issued."*     The  expected  demand  for 

^Ibid. 

^'Report  of  the  Comptroller,  1855. 

^Act  of  January  19,  1842;   Gammel,  op.  cit,  vol.  2,  p.  727. 
^Message  of  President  Houston,  December  20,  1841;  Executive  Record, 
No.  40. 


A  Financial  History  of  Texas  Id 

the  notes,  however,  did  not  materialize.  Large  importations  of 
goods  anticipated  the  requirement  that  duties  should  be  paid 
in  the  notes  or  in  specie,  and  the  demands  for  the  notes  wer© 
further  reduced  by  the  reduction  of  the  direct  tax  to  a  degree 
that  hardly  made  it  worth  collecting,  and  the  failure  of  mer- 
chants to  pay  their  license  taxes.^  Other  circumstances  un- 
favorable to  the  demand  for  the  notes  ^^ere  the  unsettled  con- 
dition of  the  country  caused  by  the  Mexican  invasion;  the 
general  commercial  depression;  the  competition  of  notes  issued 
by  banks  in  the  United  States,  by  individuals  and  by  local  gov- 
ernmental bodies  in  the  state ;  and  the  payment  of  nearly  $50,000 
of  the  notes  for  appropriations  made  before  the  notes  were 
issued  when  it  had  been  planned  to  use  notes  only  for  the 
future  maintenance  of  the  government.-  Perhaps  the  most  im- 
portant factor  influencing  the  value  of  the  notes,  however,  Avas 
lack  of  faith  in  the  government's  ability  to  fulfill  its  promises. 
Confidence  was  entertained  that  Houston  would  rectify  financial 
matters,  but  the  experiences  under  the  preceding  administration 
were  too  fresh  in  mind  to  allay  doubt  entirely.^  Notwithstand- 
ing the  fact  that  the  amount  issued  had  not  exceeded  $150,000, 
the  bills  fell  by  July  to  as  low  as  30  cents  on  the  dollar.* 
The  result  was  the  act  of  July  23,  1842,  which  made  the  bills 
receivable  in  payment  of  taxes  and  postage  at  their  current 
market  value  only.^  It  was  the  tendency  for  the  bills  to  seek 
the  vicinity  of  the  customs'  houses,  and  their  value  varied  at 


^Ibid.,  June  27,  1840;  Executive  Record,  No.  40.  Report  of  the  Secre- 
tary of  the  Treasury,  November  1,  1842;  House  Journal,  7th  Tex. 
Cong.,  app.,  p.  53. 

-Report  of  the  Secretary  of  the  Treasury,  November  1,  1842.  Senate 
Finance  Committee  Minority  Report,  January  6,  1845;  Senate  Journal, 
9th  Tex.  Cong.,  p.  116.  Texas  Diplomatic  Correspondence,  vol.  3, 
p.  1407. 

^Gouge,  op.  cit.,  p.  118.     Crane,  op.  cit.,  p.  168. 

^Telegraph  and  Texas  Register  of  June  8,  1842,  says  they  were  pass- 
ing in  Houston  and  Galveston  at  from  40  to  50  cents  on  the  dollar.  See 
also  message  of  Houston,  June  27,  1842.  Crane  (p.  164)  gays,  -specu- 
lators, like  buzzards  watching  a  sick  animal,  attacked  the  exchequers 
and  entered  into  combination   to  destroy  their  value." 

^Gammel,  op.  cit.,  vol.  2,  p.  812.  The  Telegraph  and  Texas  Register 
of  July  27,  1842,  says  in  regard  to  this  act:  "the  public  faith  is  becom- 
ing a  mock  word  and  public  credit  an  empty  bubble." 


76  Bulletin  of  the  University  of  Texas 

the  different  locations.  This  variation  in  Value  at  the  different 
points  of  entry  was  due  in  large  part  to  the  different  amounts 
in  circulation  at  each  point/  But  the  president  and  the  secre- 
tary of  the  treasury  recommended  that  the  revenue  be  collected 
only  in  specie,  and  the  president  suggested  the  prohibition  of  the 
circulation  of  all  foreign  bank  notes,  and  the  suppression  of 
individual  and  local  governmental  issues.^  The  measures  adopted 
were  to  make  the  bills  receivable  at  par  for  direct  and  license 
taxes  and  postage,^  and  to  limit  the  amount  in  circulation  at 
any  one  time  to  $50,000,*  The  limitation  of  issue  which  was 
made  possible  by  the  policy  of  rigid  economy,  the  diffused  de- 
mand for  the  bills  for  taxes  and  postage,  and  growing  confidence 
in  the  government  led  to  a  rise  in  the  value  of  the  bills  in 
1843.^     The  president  renewed  his  recommendation  to  exclude 


'The  Telegraph  and  Texas  Register  of  July  13,  1842,  reports  that 
the  bills  were  at  par  in  the  eastern  district,  and  again  reports  them 
so  on  August  10,  although  they  were  valued  at  30  cents  in  Houston 
and  50  cents  in  Galveston.  Merchants  took  advantage  of  the  variation 
by  shipping  to  the  port  where  the  bills  were  received  at  par,  and  after 
paying  duties  there,  reshipped  to  the  point  of  destination.  Ibid.,  De- 
cember 21,  1842. 

-Message  of  December  1,  1842;  Executive  Record,  No.  40.  Report  of  the 
Secretary  of  the  Treasury,  November  1,  1842.  The  suggestion  as  to  the 
payment  of  the  taxes  in  specie  was  characterized  by  the  Telegraph 
and  Texas  Register  of  November  23,  1842,  as  absurd.  This  newspaper 
went  on  to  say  that  there  was  not  enough  specie  in  the  republic  to 
meet  the  ordinary  wants  of  the  citizens  as  a  circulating  medium,  that 
all  the  necessaries  of  life  were  purchased  of  merchants  with  cotton, 
hides  and  other  products,  and  that  even  remittances  made  by  mer- 
chants to  their  creditors  abroad  were  made  in  these  articles. 

='Act  of  January  6,  1843;  Gammel,  op.  cit.,  vol.  2,  p.  866.  Act  regulat- 
ing the  postoffice  department;    ibid.,  p.   864. 

*Act  of  January  6,  1843;    sec.  5;    ibid.,  p.  830. 

''The  Telegraph  and  Texas  Register,  February  8,  1843,  reports  that 
the  collector  at  Galveston  had  rated  the  bills  at  80  cents;  that  they 
were  current  in  Houston  at  from  50  to  60  cents.  On  May  31,  they  were 
reported  current  in  Houston  at  45  cents,  but  were  appreciating.  On 
December  6,  1843,  they  were  taken  by  the  collector  at  Galveston  at  par 
and  were  current  at  from  90  to  95  cents,  but  later  in  December  they 
had  declined  to  80  and  85  cents.  The  amount  outstanding  at  the  date 
of  the  message  of  December  12,  1843,  was  estimated  by  the  president 
at  $13,000. 


A  Financial  History  of  Texas  77 

foreign  bank  notes  and  individual  and  other  issues,  and  congress 
responded  to  the  extent  of  repealing  all  laws  granting  to  any 
individual  or  corporation  the  authority  to  issue  notes.  It  was 
also  provided  that  after  March  1,  1844,  the  amount  of  ex- 
chequers outstanding  should  not  exceed  $20,000/  But  deprecia- 
tion and  fluctuation  still  continued,  being  influenced  now  by  the 
prospects  for  the  annexation  of  Texas  to  the  United  States.^ 
Houston  was  succeeded  as  president  in  December,  1844,  by 
Aijson  Jones.  The  condition  of  the  finances  had  so  improved 
by  this  time  that  the  attempt  was  made  to  put  the  republic  on 
a  specie  basis.^  The  act  of  February  3,  1845,  repealed  the  law 
authorizing  the  issue  of  exchequer  bills,  and  provided  that  as 
soon  as  the  liabilities  of  the  government  were  received  in  pay- 
ment of  taxes  and  other  public  dues,  specie  should  be  the  only 
public  tender,  except  in  the  case  of  land  dues  and  patents.* 
The  action  of  repeal  was  a  little  premature,  however,  for  in 
June,  authority  was  given  to  issue  exchequers  to  an  amount 
not  exceeding  $10,000  in  order  to  defray  the  appropriations  then 
made.^  From  July,  1844,  to  August,  1845,  the  bills  were  re- 
ceived at  Galveston  at  from  80  to  95  cents,  but  at  par  in  the 
eastern  districts;  those  received  subsequently  were. at  par.  The 
average  discount  on  the  bills  received  from  July  31,  1844,  to 
September  1,  1845,  was  3%.«  Less  than  $10,000  of  the  exchequers 
were  outstanding  at  the  close  of  the  republic,  and  they  were  all 
eventually  received  by  the  state  in  the  collection  of  revenue  du« 
the  republic. 


^Acts  of  February  5,  1844;    Gammel,  op.  cit.,  vol.  2,  pp.  1021,  1031. 

-Telegraph  and  Texas  Register,  February  28,  1844.  On  February  12, 
1844,  following  an  issue  of  about  $25,000,  the  rate  at  Galveston  was  70 
cents;  on  March  6,  1844,  50  cents,  although  the  bills  were  current  in 
Houston  at  60-75  cents,  and  at  par  in  the  eastern'district;  Report  of 
the  Secretary  of  the  Treasury,  1844.  The  average  discount  on  the 
bills  received  from  customs  during  the  year  ending  July  31,  1844,  was 
121/^  per  cent. 

Message  of  Jones,  December  16,  1844.  (Lester) :  Life  of  Sam 
Houston,  p.  258,  says  in  error  that  Houston  left  the  presidency  with 
the  exchequer  bills  at  par. 

^Gammel,  op.  cit.,  vol.  2,  p.  1140. 

'^Ibid.,  p.  1216. 

"Report  of  the  Secretary  of  the  Treasury,  February  15,  1846. 


78  Bulletin  of  the  University  of  Texas 

D.     Eight  Per  Cent  Treasury  Bonds,. 

The  act  of  February  5,  1840,  authorized  the  secretary  of  the 
treasury  to  issue  in  denominations  of  $100,  $500,  and  $1,000, 
8%  coupon  bonds,  to  an  amount  not  exceeding  $1,500,000.  In- 
terest was  to  be  payable  semi-annually  in  gold  or  silver,  and 
the  revenue  from  the  license  tax  and  the  tax  on  personal  prop- 
erty was  set  apart  for  this  purpose.  The  bonds  Avere  to  be  used 
in  the  payment  of  the  appropriations  for  1840,  and  were  re- 
ceivable for  any  debt  to  the  government/ 

The  appropriations  of  the  Fourth  Congress  w^ere  the  largest 
of  any  during  the  history  of  the  republic,  and  this  issue  of  bonds 
was  a  measure  adopted  by  the  Lamar  administration  to  meet 
the  appropriations.  Treasury  notes  had  depreciated  to  16% 
cents  on  the  dollar,  and  it  was  thought  the  interest  provision 
would  result  in  a  higher  rating  for  the  bonds,  and  in  their 
supplanting  the  notes.-  The  provision  that  the  interest  should 
be  paid  in  specie  was  nothing  short  of  a  farce,  in  view  of  what 
had  been  the  specie  receipts  of  the  government,  and  it  is  in- 
credible that  either  legislators  or  receivers  of  the  bonds  could  have 
had  any  faith  in  it.  No  change,  moreover,  was  made  in  the  laws 
defining  the  tender  for  the  taxes  pledged.  By  the  appropriation 
act  of  February  5,  1841,  it  was  provided  that  no  further  issues 
of  these  bonds  should  be  made  after  March  1,  1841,  and  the  act 
of  January  19,  1842,  deprived  them  of  their  tender  power  in 
payment  of  debts  to  the  government,  except  for  land  dues  and 
patent  fees.^ 

The  amount  issued  was  $849,900.*  They  were  depreciated  from 
the  beginning,  the  discount  being  from  85%  to  75%.^  There 
were  received  in  the  collection  of  revenue  .  and  destroyed, 
$41,200,  leaving  $808,700,  with  accumulated  interest,  to  be  paid.^ 


^Gammel,  op.  cit.,  vol.  2,  p.  241. 

^'Report  of  the  Auditor  and  Comptroller,  December  27,  1849. 

^Gammel,  op.  cit.,  vol.  2,  pp.  574,  727.  An  act  of  December  10,  1840, 
stopped  the  further  issue  of  the  bonds,  but  that  of  December  24,  1840, 
again  authorized  them  for  meeting  the  appropriations.  Ibid.,  pp.  584, 
473. 

*Report  of  the  Auditor  and  Comptroller,  December  27,  1849. 

''Ibid. 

^Report  of  the  Auditor  and  Comptroller,  November  12,  1851. 


A  Financial  History  of  Texas  19 

The  average  par  value  which  the  government  received  from  them 
was  estimated  by  the  auditor  and  comptroller  in  the  report  of 
December  27,  1849,  at  20  cents  on  the  dollar,  and  this  was  the 
rating  adopted  by  the  state  legislature/  They  came  within  the 
provisions  of  the  acts  of  Congress  of  September  9,  1850,  and 
February  28,  1855,  however,  and  were  therefore  subject  to  pro- 
rata payment  out  of  the- $7,750,000  reserved  in  the  United  States 
Treasury.  Interest  was  allowed  to  July  1,  1850,  and  the  original 
principal  and  interest  to  this  date,  $1,417,680,  was  adjusted  in 
1856  at  the  rate  of  76  9/10  cents  on  the  dollar.^  The  scaled 
amount  was  $1,090,195.92. 

E.     Ten  Per  Cent  Bonds  of  June  7,  1837. 

The  rapidly  increasing  amount  of  government  indebtedness 
in  the  form  of  audited  drafts  and  the  existence  of  many  un- 
audited claims  led  to  the  passage  of  the  act  of  June  7,  1837. 
It  provided  for  the  appointment  of  a  stock  commissioner  who, 
with  the  comptroller,  should  investigate  all  claims  against  the 
treasury.  Properly  audited  claims  were  exchangeable  for  the 
bonds  authorized  by  this  act.  An  issue  of  $3,000,000  was  pro- 
vided for,  of  a  denomination  of  $100,  bearing  10%  interest,  and 
redeemable  at  the  pleasure  of  the  government  after  September 
1,  1842.^  Funding  under  this  act  continued  until  January  1, 
1840.*  The  amount  issued  in  the  funding  of  audited  drafts 
and  claims  was  $771,000,  and  in  the  taking  up  of  land  scrip, 
$66,400,  making  a  total  of  $837,500.  During  the  period  of  the 
republic  there  was  redeemed  in  land  sorip  $1,500,  and  $10,000 
was  received  in  the  collection  of  revenue.^  The  value  that  the 
government  derived  on  the  average  from  the  liabilities  funded 
was  estimated  by  the  auditor  and  comptroller  at  70  cents  on  the 
dollar,  and  this  was  the  rating  adopted  by  the  state.^  There 
were  some  cases  in  which  this  scaling  was  recognized  as  doing 
an  injustice  and  these  were  recommended  by  the  auditorial  board 
to  the  legislature  for  relief.  These  bonds  as  a  part  of  the 
revenue  debt  were  finally  adjusted  on  the  basis  of  76  9-10  cents 


^Act  of  January  31,  1852;   Laws  of  1852,  p.  38. 

^Report  of  the  Comptroller,  1855. 

'Gammel,  op.  cit.,  vol.  1,  p.  1301. 

*Act  of  January  19,  1839;   ibid.,  vol.  2,  p.  51. 

''Report  of  the  Auditor  and  Comptroller,  December  27,  1849. 

*Ibid.     Act  of  January  31,  1862;   Laws  of  1852,  p.  38. 


80  Bullet  hi  of  the  University  of  Texas 

on  the  dollar,  and  at  the  date  of  settlement  in  1856,  the  original 
principal  and  interest  to  July  1,  1850,  amounted  to  $1,687,594.80.^ 
Scaled  to  76  9-10  cents  on  the  dollar  this  sum  was  $1,297,375.89. 
As  this  settlement  did  not  do  justice  to  those  cases  recommended 
in  the  auditorial  report  of  1849,  an  appropriation  of  $60,000 
was  made  by  the  state  legislature  to  make  up  the  difference  be- 
tween the  scaled  rate  and  par.- 

F,     Eight  and  Ten  Per  Cent  Bonds  of  February  5,  1840. 

To  succeed  the  funding  act  of  June  9,  1837,  which  expired 
January  1,  1840,  and  in  order  to  relieve  the  currency  of  the 
plethora  of  treasury  notes,  the  funding  act  of  February  5,  1840, 
was  passed.  It  provided  for  an  issue  of  bonds  in  denominations 
of  $100,  $500,  and  $1,000,  to  an  amount  necessary  to  fund  the 
notes  and  audited  liabilities  of  the  government.  The  bonds  bore 
10%  interest  payable  in  specie,  and  w^ere  redeemable  at  the 
pleasure  of  the  government  after  June  30,  1845.  Treasury 
notes  presented  after  July  1,  1840,  however,  were  fundable  only 
in  bonds  bearing  8%  interest.^  The  differences  between  these 
and  the  bonds  authorized  by  the  act  of  June  7,  1837,  were  that 
the  latter  had  a  special  pledge  of  revenue  for  the  payment  of 
the  interest  but  no  stipulation  in  regard  to  the  medium  in  which 
it  should  be  paid,  were  receivable  for  dues  owing  to  the  gov- 
ernment, were  transferable  only  on  the  books  of  the  stock  com- 
missioners, and  were  not  emplo^^ed  in  funding  treasury  notes; 
while  the  former  had  no  special  provision  for  the  payment  of 
interest,  except  that  it  ^hould  be  paid  in  specie,  were  not  re- 
ceivable in  the  revenue,  were  transferable  by  simple  endorsement, 
and  were  mainly  employed  in  funding  treasury  notes. 

The  act  of  February  5,  1840,  was  repealed  in  1841,  owing  no 
doubt  to  its  failure  to  raise  the  value  of  the  treasury  notes."' 
Its  operation  was  resulting  in  the  substitution  of  an  interest 
for  a  non-interest  liability,  and  with  no  apparent  benefit  to  the 
credit  of  the  government.  Of  the  bonds  bearing  10 7^  interest 
there  were  issued  $813,800,  $1,400  of  which  were  redeemed  in 
land  scrip  during  the  period  of  the  republic;  of  the  8%  bonds 


'Report  of  the  Comptroller,  1855. 

''Act  of  February  2,  1856;  Laws  of  1856,  Reg.  Sess.,  p.  64. 

^Gammel,  op.  cit.,  vol.  2,  p.  453. 

*Act  of  February  4,  1841;    ibid.,  p.  639. 


A  Financial  History  of  Texas  81 

there  were  issued  only  $27,080.^  The  auditorial  board  confesseiJ 
to  the  impossibility  of  ascertaining  with  anything  approaching 
exactness  the  value  received  by  the  government  from  the  lia- 
bilities funded,  and  arbitrarily  rated  the  bonds  at  30  cents  on 
the  dollar.^  The  original  principal  and  interest  to  July  1,  1850, 
amounted  to  $1,674,380.42.^  In  accordance  with  the  acts  of  Con- 
gress of  September  9,  1850,  and  Febnlary  28,  1855,  and  the 
assenting  act  of  Texas  of  February  1,  1856,  payment  was  made 
on  the  basis  of  76  9-10  cents  on  the  dollar.  Scaled  at  this  rate 
the  amount  became  $1,287,788.54. 

G.     Miscellaneous  Debts. 

Under  the  ordinance  and  decree  of  December  5,  1835,  au- 
thorizing a  loan  of  $1,000,000,  there  were  two  loans  made  of 
investors  in  New  Orleans.  The  history  of  these  loans  has  al- 
ready been  given,*  and  it  is  sufficient  only  to  note  here  that  the 
Triplett  loan  of  January  20,  1836,  from  which  $20,070  was  de- 
rived was  settled  with  8%  interest  in  land  scrip  at  fifty  cents 
an  acre,  according  to  the  act  of  June  3.  1837,  and  that  the 
Erwin  loan  of  January  11,  1836,  was  settled  on  the  same  basis 
by  the  act  of  May  24,  1838.^  Advances  by  McKinney  and 
Williams,  of  Texas,  during  the  struggle  for  independence,  to  the 
amount  of  $54,408.11  were  also  settled  in  land  scrip  at  the  rate 
of  50  cents  an  acre.^  These  and  such  portions  of  its  floating 
debt  as  were  settled  by  the  republic  itself  were  thus  paid  in 
land  scrip  or  in  other  evidences  of  debt,  such  as  treasury  notes 
or  bonds. 

H.     Recapitidation. 

The  total  amount  of  specie  or  specie  equivalent  received  by 
the  Eepublic  of  Texas  from  loans  was  $457,380,  and  if  to  this 


^Report  of  the  Auditor  and  Comptroller,  November  12,  1851. 

^Report  of  the  Auditor  and  Comptroller,  December  27,  1849.  In  1841 
the  public  talk  of  repudiating  the  debt,  the  president's  recommendation 
in  his  message  of  December  20,  1841,  that  redemption  be  postponed, 
and  the  general  critical  financial  condition  of  the  government,  caused 
the  greatest  depreciation  of  the  notes  and  bonds.  On  January  26,  1842, 
the  Telegraph  and  Texas  Register  quoted  the  8  per  cent  bonds  at  from 
6   to   7   cents,  and   on   February  2  and   May   9  at   from   6   to   8   cents.' 

•Report  of  the  Comptroller,  1855. 

Mnie,  p.  16. 

'Gammel,  op.  cit.,  vol.  1,  pp.  1289,  1498. 

"Act  of  February  5,  1844;    ibid.,  vol.  2,  p.  1007. 

6— H 


82  Bulletin  of  the  University  of  Texas 

are  added  the  proceeds  of  loans  made  by  the  revolutionary  gov- 
ernmental bodies  the  total  receipts  amount  to  $524,370.^ 

The  revenue  debt,  or  that  which  came  under  the  provisions 
of  the  acts  of  the  United  States  Congress  of  September  9,  1850, 
and  February  28,  1855;  amounted,  original  principal  and  in- 
terest to  July  1,  1850,  to  $10,078,703.21.  The  holders  of  this 
debt  received  the  $7,750,000  appropriated  by  the  United  States 
in  1855",  which  was  payment  on  the  basis  of  about  seventy-six 
and  nine-tenths  cents  on  the  dollar.  The  state,  however,  ap- 
propriated $60,000  to  compensate  certain  creditors  for  the  dif- 
ference between  the  scaled  and  the  par  ratings,  w^hich  brought 
the  basis  of  settlement  of  this  revenue  debt  to  something  more 
than  the  76  9-10  cents.-  Of  the  $7,750,000  appropriated  by  the 
United  States  for  the  payment  of  this  debt,  there  remained  an 
unexpended  balance  on  January  1,  1861,  of  $101,113.27.  In 
1881  a  payment  of  $45,000  out  of  this  balance  was  made.  The 
total  payment  made  by  the  United  States  on  account  of  the  debt 
of  the  Republic  of  Texas  amounted  to  $7,693,886.73. 

The  face  value  of  the  audited  claims  and  miscellaneous  liabili- 
ties cannot  be  stated.  The  amount  of  such,  excluding  interest 
was,  according  to  the  report  of  the  auditor  and  comptroller, 
November  12,  1851,  $1,008,267.37,  but  this  was  an  underestimate. 
Payment  of  this  class  of  debt  devolved  upon  the  state,  and  the 
total  paid  by  the  state  down  through  1902,  the  date  of  the  last 
payment,  amounted  to  $1,287,951.13.  To  this  amount  of  $1,287.- 
951.13  should  be  added  $288,263.16  which  was  the  net  amount 
of  the  liabilities  of  the  republic  received  by  the  state  in  the 
collection  of  revenue  due  the  republic. 

SUMMARY : 

Amount  paid  by  the  United  States $7,693,886.73 

Amount  paid  by  the  state 1,287,951.13 

Amount  received  by  the  state  in  the  collection  of 

revenue    288,263.16 


Total  paid  on  debt  of  republic $9,270,101.02 

^Gouge,   op.   cit.,   p.   273. 
^Laws  of  1856,   p.    64. 


PART  III. 

THE  STATE,  1846-1861. 

Chapter  1. 

introduction. 

In  the  general  election  held  in  September,  1836,  to  ratify  the 
constitution  of  the  republic  and  to  elect  the  national  officers, 
the  voters  of  Texas  declared  themselves  almost  unanimously 
in  favor  of  annexation  to  the  United  States.  Owing  mainly 
to  the  slavery  question,  however,  the  desire  of  Texas  was  not 
at  this  time  reciprocated.^  In  1843  overtures  were  again  made 
and  a  treaty  of  annexation  was  signed,  but  was  rejected  by  the 
United  States  Senate  in  April,  1844.^  The  expedient  of  a  joint 
resolution  was  then  adopted  by  the  friends  of  Texas  in  Con- 
gress, and  on  March  1,  1845,  the  United  States  proposed  annex- 
ation. President  Jones  of  the  republic  called  a  convention, 
which  on  July  4,  1845,  passed  an  ordinance  accepting  the 
proposal  of  the  United  States,  and  this  ordinance  and  the 
constitution  for  the  new  state  which  had  been  framed  by  the 
convention  were  ratified  by  a  popular  vote  on  October  13,  1845.^ 
Annexation  was  consummated  by  the  joint  resolution  of  the 
United  States,  December  29,  1845;  and  on  February  19,  1846, 
President  Jones  turned  over  the  government  of  the  republic 
to  the  officers  of  the  new  state.  The  first  chapter  of  the  state's 
financial  history  ended  in  1861,  when  secession  took  place  and 
a  war  was  entered  upon  which  prostrated  the  finances  of  the 
state  and  the  general  economic  life  of  the  state  for  many  years 
to  follow. 

Texas  shared  with  the  rest  of  the  United  States  the  great 
prosperity  and  material  development  w^hich  characterized  the 
years  1846  to  1857.  About  the  time  of  annexation,  population 
numbered  roughly  135,000;  in  1850  it  had  increased  to  212,592, 
and  in  1860  it  was  604,215.  In  1850  the  per  cent  of  the  total 
population  that  was  negro  was  27.54;  in  1860  it  was  30.1.  The 
white  population  of  the  state  increased  173.24  per  cent  in  the 
decade  1850-1860 ;  the  rate  of  increase  of  the  slave  population 
was  213.89  per  cent ;  while  the  total  population  increased  184.2 
per  cent.*     Thus,  while  the  population  of  the  state  grew  pro- 


^Garrison,  Texas,  p.  255. 

^Ibid.,  p.  257. 

»Ibid.,  p.  260. 

♦Eighth  Census  of  the  United  States.     1860.     Vol.     Population,  p.  598. 


84  Bulletin  of  the  University  of  Texas 

digiously  between  1850  and  1860,  the  large  negro  element 
minimized  the  value  of  the  growth. 

The  population  of  the  state  was  almost  wholly  rural.  Gal- 
veston was  the  leading  town  in  1850  with  a  population  of  4,177 ; 
San  Antonio  was  next  with  3,488;  Houston  was  third  with 
2,396 ;  New  Braunfels  w^as  fourth  with  1,298,  and  Marshall  was 
fifth  with  1,189.  The  total  number  of  people  in  the  twenty- 
three  Texas  towns  listed  in  the  United  States  Census  of  1850 
was  only  20,209,  Only  five  of  the  twenty-three  towms  had  over 
one  thousand  inhabitants.  Counting  as  urban  the  population 
of  all  the  towns,  the  per  cent  of  the  population  of  the  state 
that  was  urban  was  9.5,  The  population  was  spread  very  thinly 
over  the  state,  there  being  on  the  average  in  1850  only  eight- 
tenths  of  a  person  to  the  square  mile.  By  1860  the  average 
density  of  population  was  2.3  persons  to  the  square  mile.  There 
was  practically  no  increase  in  the  urban  proportion  of  the 
population  between  1850  and  1860.  In  1860  San  Antonio  was 
the  leading  city  with  8.235  inhabitants;  Galveston  was  next 
with  7,307;  Houston  was  third  with  4,845;  and  Austin  was 
fourth  with  3.494.  The  United  States  Census  of  1860  lists 
forty-two  cities  and  towns  with  a  total  population  of  59,651. 
Their  population  was  9.8  per  cent  of  the  total  population. 

Population  continued  to  follow  rather  closely  the  navigable 
waterways,  but  transportation  was  nevertheless  largely  by 
means  of  the  ox  wagon.  Railroad  building  began  before  the 
middle  of  the  fifties,  but  the  towns  affected  by  it  were  com- 
paratively few  and  were  on  or  near  the  coast.  The  number  of 
miles  of  railroad  in  operation  was  32  in  1854,  40  in  1855,  71 
in  1856,  157  in  1857,  205.5  in  1858,  284.5  in  1859,  and  306  in 
1860.^  The  estimated  cost  of  construction  of  the  306  miles  was 
$11,232,345.- 


'Eighth  Census  of  the  United  States.  1860.  Vol.  Mortality  and  Mis- 
cellaneous Statistics,  p.  333.  See  also,  Potts,  Railroad  Transportation 
in  Texas^  p.  42.  Compare  Ringwalt,  Development  of  Transportation 
Systems  in  the  United  States,  p.  166,  who  gives  the  following  mileage 
statistics  for  Texas: 

Turnpike 
and  other 
Railroad  mileage  Steamboat  mileage       road  mileage 

1850    .     .  —  80  7,618 

1860    .     .  78  2,185  16,193 

^Eighth  Census  of  the  United  States.  1860.  Vol.  Mortality  and 
Miscellaneous'  Statistics,  p.  328. 


A  Financial  History  of  Texas  85 

Agriculture  was  practically  the  sole  occupation  of  the  people, 
as  was  shown  by  the  large  per  cent  of  the  population  that  was 
rural.  In  1850  the  number  of  acres  of  improved  land  in  farms 
w^as  643,976,  and  the  number  of  acres  of  unimproved  land  in 
farms  was  10,852,363.  In  1860  the  respective  amounts  were 
2,650,781  and  22,693,247.  Though  agriculture  was  almost  the 
sole  occupation  of  the  people  of  the  state,  the  farm  area  was 
only  6.8  per  cent  of  the  total  land  area  in  1850  and  15.1  per 
cent  in  1860.  The  balance  of  the  land  area  was  unoccupied  and 
uncultivated,  but  it  was  owned  either  by  the  state  or  by  land 
speculators.  The  cash  value  of  the  farms  in  1850  was  $16,550,- 
008,  and  in  1860,  $88,101,320.  The  value  of  farming  implements 
was  $2,151,704  in  1850,  and  $6,259,452  in  1860.  The  value  of 
livestock  was  $10,412,927  in  1850,  and  $42,825,447  in  1860. 
Cotton  w^as  the  principal  crop,  and  corn  was  the  second  crop 
in  importance.  There  were  58,072  bales  of  cotton  of  400  pounds 
each  produced  in  1849,  and  431,463  bales  in  1859.^  The  average 
price  per  pound  for  upland  cotton  was  12.3  cents  in  1849,  and 
11  cents  in  1859.- 

Manufactures  were  either  brought  in  from  outside  of  the 
state  or  were  made  in  the  home,  though  there  were  some  local 
manufacturing  establishments.  In  1850  there  were  309  manu- 
facturing establishments,  including  shops  doing  custom's  work 
and  repairing,  with  a  total  annual  product  valued  at  only 
$1,168,538.  In  1860  there  were  983  establishments,  whose 
annual  product  was  valued  at  only  $6,577,202.^  The  value  of 
home  manufactured  products  was  $266,984  in  1850,  and  $584,- 
217  in  I860.* 

Though  diversification  of  industry  was  yet  to  come  and 
though  most  people  depended  on  the  ox  wagon,  population  was 
increasing  rapidly,  agriculture  was  flourishing,  and  the  state 
as  a  whole  was  prospering. 

The  finances  of  this  period  will  be  treated  under  the  topics, 
Expenditures,  School  Funds,  Receipts,  and  Public  Debt. 


^Seventh  Census  of  the  United  States.  1850.  Pp.  515  and  1020. 
Eighth  Census  of  the  United  States.     1860.     Vol.  Agriculture,  p.  148. 

-Bulletin  of  the  United  States  Department  of  Commerce,  Bureau  of 
the  Census,  No.  131,  p.  82.  The  average  price  for  the  period  1846-1860 
was  11  cents  per  pound. 

^'Twelfth  Census  of  the  United  States.     1900.     Vol.  8,  p.  862. 

^Seventh  Census  of  the  United  States.  1850.  Pp.  515  and  1020. 
Eighth  Census  of  the  United  States.     1860.     Vol.  Agriculture,  p.  151. 


Chapter  2. 
expenditures. 

The  history  of  expenditures  to  1861  may  be  divided  into  the 
two  periods,  1846-1851  and  1852-1860.  DoAvn  to  1852  the  policy 
of  economy  followed  during  the  last  years  of  the  republic  was 
continued.  Annexation  relieved  the  state  of  the  duties  having 
to  do  with  foreign  intercourse,  an  army,  a  navy,  and  a  post 
service,  and  until  1852  no  new  duties  were  undertaken,  nor  was 
the  scale  of  performance  of  the  old  ones  enlarged.  The  largest 
items  of  expense  down  to  1852  were  the  judiciary,  the  legis- 
lature, and  the  administration  of  the  general  land  office.  To- 
gether they  made  up  about  60  per  cent  of  the  total  expenditures. 
The  judiciary  had  been  scantily  paid  during  the  republic,  but 
after  1845  salaries  were  increased.  Frequent  sessions  of  the 
legislature  were  called  for  in  order  to  enact  the  statute  laws 
for  the  newly  organized  state,  but  until  1850  there  were  only 
three  sessions  of  about  three  months  each.  In  1850  the  question 
arose  as  to  the  settlement  of  the  northwest  boundary  dispute 
with  the  United  States,  and  thereafter  special  sessions  multi- 
plied. Though  they  were  of  brief  duration,  the  mileage  expense 
was  a  large  item.  Legislative  expenditures  constituted  about 
12  per  cent  of  the  total  expenditures  of  the  period.  The  gen- 
eral land  office  was  the  most  costly  of  the  departments  of 
general  administration,  and  receipts  from  lands  did  not  counter- 
balance the  expenditures. 

Until  1852  the  state  was  dependent  on  taxation  for  revenue, 
but  in  1851  there  came  a  windfall  in  the  form  of  the  five  million 
dollars  of  United  States  bonds  which  were  a  part  of  the  pay- 
ment by  the  United  States  for  the  cession  of  the  northwest 
territory  and  for  the  relinquishment  by  Texas  of  certain  claims 
against  the  United  States.  The  first  claim  upon  these  bonds 
was  regarded  to  be  that  part  of  the  debt  of  the  Republic  of 
Texas  which  was  not  subject  to  payment  out  of  the  United 
States  Treasury.^  Payment  of  this  debt  was  begun  in  1852  and 
continued  throughout  the  period.  It  constituted  by  far  the 
largest  item  of  expenditure,  being  about  23  per  cent  of  the 
total. 


'Message  of  Governor  Bell,  January  13,  1853. 


A  Financial  History  of  Texas  87 

The  use  to  which  the  remainder  of  the  bonds  should  he  put 
vexed  the  public  mind  and  was  a  good  test  of  the  sanity  of  the 
early  Texans.  There  was  more  than  four  million  dollars  avail- 
able. Some  advocated  its  use  for  internal  improvements,  others 
for  education,  while  others  believed  it  should  be  kept  as  a  fund, 
the  interest  from  which  would  be  sufficient  to  meet  the  ordinary 
expenses  of  the  state  and  thus  relieve  the  people  from  taxation.* 
$2,000,000  of  the  bonds  was  given  to  the  general  school  fund, 
$100,000  to  the  university  fund,  and  the  remainder  was  used 
to  meet  the  current  expenditures  of  the  state.  The  taxes  that 
would  have  been  collected  for  the  state  purposes  were  relin- 
quished from  1852  to  1858  to  the  counties  and  used  by  them 
to  pay  their  debts,  to  build  courthouses  and  jails,  and  to  meet 
county  expenses  for  other  objects.  This  relinquishment  did  not 
benefit  equally  all  the  counties,  but,  in  general,  the  end  sought 
was  attained,  and  as  late  as  1879  the  bonded  debt  of  Texas 
counties  was  only  $2,030,907.^  But  the  use  of  the  bonds  in 
paying  the  ordinary  expenses  of  the  state  government — which 
was  necessitated  by  this  relinquishment  policy — ^was  very  poor 
financiering,  and  there  is  little  doubt  but  that  the  benefit  ta 
the  state  would  have  been  greater  if  the  bonds  had  been  used 
to  endow  further  the  school  and  university  funds.  On  August 
31,  1860,  there  was  to  the  credit  of  the  general  revenue  account 
only  $50,000  of  the  bonds,  and  these  were  a  part  of  the  $100,000 
borrowed  from  the  university  fund.  Thus  by  1861  not  only 
had  all  the  bonds  not  reserved  for  the  two  trust  funds  been 
expended,  but  those  even  in  one  of  the  trust  funds  had  been 
borrowed.  This  occurred  during  a  period  when  the  population 
and  wealth  of  the  state  were  growing  rapidly.  Expenditures, 
while  liberal,  were  not  extravagant,  and  the  explanation  of  the 
flight  of  the  bonds  lies  rather  in  the  revenue  policy  followed.* 
After  1853  the  salaries  of  those  in  the  service  of  the  state  were 


^Message  of  Governor  Bell,  November  10,  1851. 

-Tenth   Census   of   the  United   States,   vol.   7,   p.    756. 

"The  Galveston  News,  January  24,  1854,  comments  on  a  tendency  ta 
extravagance  in  expenditures.  Sam  Houston  in  a  letter  of  May  1, 
1860,  published  in  the  State  Gazette  of  July  21,  1860,  criticizes  the  ad- 
ministration of  1858  and  1859  as  not  having  managed  the  government 
economically. 


SS  Bulletm  of  the  University  of  Texas 

increased,  but  $3,000  for  the  governor  and  the  supreme  court 
judges,  $2,250  for  district  judges,  $1,800  to  $2,000  for  heads  of 
departments,  and  $900  to  $1,200  for  clerks  were  not  unreason- 
able compensations.^ 

An  item  of  extraordinary  expense  which  became  important 
in  1852  and  remained  so  thereafter  was  frontier  defense.  The 
Indians  had  been  comparatively  quiet  up  to  that  time,  but  as 
they  were  then  being  pushed  farther  and  farther  west,  the 
outposts  of  the  white  settlements  experienced  their  resentment. 
The  state  maintained  mounted  troops  on  the  frontier  at  a  heavy 
expense  in  order  to  protect  the  settlements.  The  expenditures 
for  this  purpose  during  the  four  years  1852-1855  amounted  to 
about  $95,000,  and  the  claim  against  the  United  States  for  this 
amount  was  relinquished  in  accordance  with  the  act  of  Con- 
gress of  February  28,  1855.  From  1856  to  1861  over  $375,000 
was  expended  for  this  purpose,  and  it  was  on  this  account  that 
the  $100,000  of  United  States  bonds  belonging  to  the  univer- 
sity fund  was  borrowed  in  1860.  The  seriousness  of  this  ex- 
pense as  a  drain  upon  the  treasury  may  be  best  understood 
by  the  fact  that  it  constituted  in  1860  more  than  24  per  cent 
of  the  expenditures.  The  Indians  were  the  charges  of  the 
United  States  and  that  government  was  financially  responsible 
for  them,  but  Texas  was  not  reimbursed  for  her  expenditures 
for  frontier  defense  until  1906. 

The  state  penitentiary  was  the  object  of  increased  appro- 
priations from  1852  to  1858.  It  was  enlarged,  and  as  an  adjunct 
to  it  a  factory  for  the  manufacture  of  cotton  and  woolen  goods 
was  built  and  equipped  in  1854.  The  policy  of  leasing  the 
convicts  in  order  to  reduce  their  expense  to  the  state  was  also 
-considered,   but   was   not   adopted.-     The   net    expense   of  the 


^The  governor's  salary  had  been  fixed  by  the  constitution  at  $2,000  for 
ten  years.  The  increase  to  $3,000  was  made  by  the  act  of  December 
20,  1855;  Laws  of  1855,  p.  13.  Act  of  February  11,  1854,  raised  salaries 
of  the  attorney  general,  comptroller,  treasurer,  and  other  heads;  Laws 
of  1854,  p.  77.  The  salaries  of  the  judges  of  the  supreme  and  district 
courts  were  increased  in  1856;  Laws  of  1856,  p.  69.  The  salaries  of 
chief  clerks  of  the  departments  were  increased  in  1858;  Laws  of 
1858,  p.  247. 

^Message  of  Governor  Pease,  December  23,  1853.  Report  of  the 
Committee  on  the  Penitentiary;   House  Journal,  7th  Leg.,  p.  345. 


A  Financial  History  of  Texas  ^  89 

institution  decreased  after  the  factory  got  into  operation,  and 
during  the  Civil  AVar  the  factory  was  a  most  important  aux- 
iliary of  the  government.^ 

Until  1856  the  state  made  no  provision  for  the  insane,  the 
blind,  or  the  deaf  and  dumb,  but  in  that  year  buildings  and 
maintenance  were  authorized  for  each  of  these,  and  each  of 
the  institutions  was  endowed  with  100,000  acres  of  land,- 

Expenditures  for  public  buildings  increased  after  1852.  A  new. 
capitol,  governor's  mansion,  land  office  building  and  treasury 
building  were  erected.  They  were  modest  buildings,  for  the  cost 
of  constructing  and  furnishing  all  of  them  did  not  exceed 
$270,000. 

Expenditures  of  minor  importance  were  for  pensions  and  for 
what  may  be  called  industrial  purposes.  No  general  pension 
law  was  enacted,  but  cases  of  soldiers  and  seamen  disabled  in 
the  Texas  Revolution  or  in  the  service  of  the  Republic  of  Texas 
were  dealt  with  individually.  Industrial  expenditures  were  fojr 
the  taking  of  the  state  census,  and  in  1858  for  a  geological  and 
agricultural  survey  of  the  state.  Public  printing  increased  in 
cost  after  1851,  mainly  because  of  the  increased  volume  of 
printing. 

Expenditures  so  far  considered  related  to  state  duties  of  un- 
questioned legitimacy.  The  policy  that  should  be  followed  in 
regard  to  internal  improvements,  however,  was  the  subject  of  a 
vigorous  controversy.  During  the  republic  four  railroads  were 
chartered,  but  the  aid  granted  to  them  was  only  their  right  of 
way  over  the  public  domain,  and  not  one  was  built.^  It  was  not 
unusual  to  find  in  state  constitutions  which  were  drawn  up  at 
about  the  time  Texas  adopted  hers  a  provision  that  enjoined 
encouragement  to  internal  improvements.  A  similar  injunction 
was  lacking  in  the  Texas  Constitution  of  1845,  and  the  only  pro- 
visions relating  to  the  subject  were  that  no  appropriation  should 


^The  expenditures  for  the  penitentiary  from  1848  to  1861  amounted 
to  $318,958.  Report  of  the  Comptroller,  1868-9,  pp.  44-49.  See  also 
House  Journal,  5th  Leg.,  appendix. 

^Laws  of  1856,  Adjourned  Session,  pp.  39,  58  and  61,  and  Laws  of 
1858,  p.  251. 

^Alexander  Deussen,  "The  Beginnings  of  the  Texas  Railroad  System," 
in  Transactions  of  the  Texas  Academy  of  Science,  vol.  9,  p.  43. 


90  Bulletin  of  the  University  of  Texas 

be  made  for  internal  improvements  without  the  concurrence  0!*^ 
Iwo-thirds  of  both  houses  of  the  legislature,  and  that  the  state 
should  not  be  part  owner  of  the  stock  or  property  belonging  to 
any  corporation.^  During  the  first  years  of  statehood  railroad 
c-ompanies  were  chartered,  but  no  construction  took  place,  and 
the  charters  were  forfeited.  No  subsidies  were  given,  foreign 
capital  was  timid,  domestic  capital  was  both  scarce  and  other- 
wise more  profitably  employed,  population  was  sparse,  the 
traffic  in  sight  small,  and  distances  to  be  covered  were  great. 
The  failure  of  unaided  private  enterprise  down  to  1852  to  pro- 
vide means  of  transportation  forced  the  question  of  state  assist- 
ance to  the  forefront  of  public  questions. 

The  method  of  state  assistance  first  adopted  was  the  donation 
in  several  special  chartering  acts  of  eight  sections  of  land  for 
each  completed  mile  of  road.^  Previously,  in  1850,  statutory 
permission  was  given  the  cities  and  counties  along  the  route 
of  the  proposed  San  Antonio  Railroad  to  subscribe  to  its  capital 
stock.^  The  city  of  San  Antonio  and  Bexar  County  each  sub- 
scribed $100,000,  and  these  were  the  only  municipal  subsidies 
given  in  Texas  before  the  Civil  War.* 

The  imagination  of  the  public  was  kindled  by  the  receipt  by 
the  state  of  the  $5,000,000  of  United  States  bonds ;  and  in  1852 
public  meetings  and  conventions  began  to  be  held  to  discuss  the 
subject  of  internal  improvement.^  During  the  years  from  1852 
to  1856,  which  was  a  period  of  discussion,  three  plans  for  secur- 
ing a  system  of  improvements  were  presented.  One  was  called 
the  ''State  Plan",  and  was  championed  by  Governor  Pease.  It 
comprehended  a  system  of  railroads,  canals  and  river  improve- 
ments.    The  railroads  were  to  be  built  and  owned  by  the  state. 


^Art.  7,  sees.  8  and  31. 

-Special   Laws   of  1852,   p.   97. 

^Laws  of  1850,  p.  35. 

^Texas  Almanac,  1859.  The  special  tax  levied  by  Bexar  County  was 
reluctantly  paid,  particularly  by  non-residents  of  the  county,  and  the 
state  comptroller  in  1856  or  1857.  following  an  opinion  of  the  attorney 
general,  instructed  the  assessors  and  collectors  no  longer  to  insist  on 
the  payment  of  the  tax.    Report  of  Comptroller,  1856-7,  p.  20. 

^Message  of  Governor  Bell,  January  13,  1853;  House  Journal,  4th 
Leg.,  Second  Sess..  p.  20.  The  Texas  State  Gazette,  July  12,  1856.  The 
Galveston  News,  January  17,  1854,  and  May  29,   1855. 


A  Financial  History  of  Texas  91 

but  leased  for  private  operation.  The  funds  for  construction 
were  to  be  raised  through  the  sale  of  state  bonds,  and  the  interest 
on  the  bonds  was  to  be  met  by  a  direct  tax,  until  an  amount 
sufficient  to  meet  the  interest  should  be  realized  from  the  sale  of 
the  public  lands  or  from  the  profits  on  the  constructed  works. ^ 
The  advocates  of  this  plan  thought  that  by  it  the  state  would 
secure  during  the  next  fifteen  yesirs  internal  improvements  valued 
at  from  twenty-five  to  thirty  million  dollars.  "No  argument 
against  the  practicability  of  the  plan  here  presented,"  said  the 
governor,  "can  be  drawn  from  the  experience  of  other  states, 
which  have  attempted  a  system  of  improvements,  because  none 
of  them  have  attempted  a  system  like  this. ' ' 

Another  plan  was  called  the  ' '  Iron  Policy. ' '  It  was  so  called 
because  it  proposed  the  investment  of  the  school  fund  in  railroad 
iron  which  was  to  be  loaned  to  the  roads.-  Governor  Pease  re- 
garded this  plan  as  the  alternative  to  the  "State  Plan. "^  The 
third  plan  was  called  the  "Loaning  System,"  and  was  the  plan 
to  invest  the  school  fund  in  the  bonds  of  railroad  companies.* 
The  "Loaning  System"  was  approved  by  the  convention  called 
to  consider  internal  improvements  which  met  in  Austin  July  4, 
1856,  and  in  which  twenty-six  counties  were  represented.^ 

It  was  pointed  out  that  the  experience  of  other  states  with 
internal  improvements  had  been  "enormous  expenditures  on 
unprofitable  works.  State  debts,  repudiation,  and  finally  ruinous 
taxation."^     This  experience  was  heeded,  and  the  "State  Plan" 


^Message  of  Governor  Pease,  November  5,  1855;  Senate  Journal,  6th 
Leg.,  p.  8.  House  Journal,  6th  Leg.,  pp.  401-412.  The  Texas  State 
Gazette,  February  24,  1855,  and  April  5,  1856.  The  Galveston  News 
and  the  Galveston  Journal  supported  the  State  Plan.  The  Marshall 
Republican  and  the  Houston  Telegraph  prominently  opposed.  See  Gal- 
veston News,  January  1,  1856. 

-House  Journal,  6th  Leg.,  pp.  412-19.  The  Texas  State  Gazette,  April 
5,  1856.  The  Galveston  Weekly  News,  December  25,  1855,  and  January 
1,  1856. 

^Senate  Journal,  6th  Leg.,  p.  29. 

^Majority  Report  of  the  Committee  on  Internal  Improvements;  House 
Journal,  6th  Leg.,  pp.  401-12.  Message  of  Governor  Bell,  November  12, 
1851.     Message  of  Governor  Pease,  December  23,  1853. 

^The  Texas   State  Gazette,  July  12,  1856. 

"House  Journal,  6th  Leg.,  pp.  401-12.  The  Galveston  News,  June  5, 
1855. 


92  Bulletin  of  the  University  of  Texas 

and  the  ''Iron  Policy"  were  rejected.  The  policy  adopted  was, 
first,  to  donate  to  each  railroad  sixteen  alternate  sections  of  land 
for  every  mile  of  completed  road,  the  land  to  be  surveyed  in 
sections  of  640  acres  at  the  expense  of  the  road  -^  second,  to  loan 
for  ten  years  at  six  per  cent  interest  the  United  States  bonds 
belonging  to  the  school  fund  to  railroad  companies  chartered 
by  the  state,  at  the  rate  of  $6,000  for  each  mile  constructed,  the 
loan  to  be  secured  by  a  first  lien  upon  the  property  of  a  road  ;- 
third,  to  appropriate  $300,000  out  of  the  state  treasury  for  the 
improvement  of  the  navigable  rivers,  bayous,  lakes,  and  bays  of 
the  state,  and  for  the  construction  of  canals.^  The  act  carrying 
this  appropriation  imposed  the  important  conditions  that  the 
maximum  amount  to  be  given  to  any  one  river  project  should  be 
$50,000,  and  that  no  aid  should  be  given  unless  there  was  raised 
by  private  subscriptions  a  sum  equal  to  one-fifth  of  the  amount 
asked  of  the  state.  Some  eighteen  contracts  were  entered  into, 
and  by  the  end  of  the  fiscal  year  1863  the  appropriation  of  $300,- 
000  was  exhausted.*  It  is  difficult  to  believe  that  the  amounts 
expended  accomplished  anything.  Texas  rivers  apparently  were 
no  more  permanently  navigable  before  the  Civil  War  than  they 
are  today,  for  it  was  proposed  in  1856  that  $100,000  should  be 
expended  on  digging  a  number  of  artesian  wells  at  the  heads  of 
all  Texas  rivers  in  order  that  they  might  be  supplied  with  water.^ 
Any  improvement  in  the  rivers  which  mav  have  been  effected 


^Laws  of  1854,  p.  11. 

=Laws  of  1856,  Adj.  Sess.,  p.  31. 

^Laws  of  1856,  Adj.  Sess.,  p.  9.     For  railroad  mileage  see  ante^  p.  84. 

*At  the  end  of  the  fiscal  year  1859  there  had  been  drawn  $217,227.  In 
1860  and  1861  $90,449  was  drawn,  but  this  amount  less  refunds  and 
the  sum  derived  from  sale  of  property  left  net  amount  drawn  of  $87,- 
555.  In  1862  and  1863,  $2,529  was  drawn.  The  total  drawn  was  $307,- 
311.  See  comptroller's  reports,  1856-7  and  1858-9;  and  the  original 
Warrant  Register,  1861-1871,  in  the  vault  of  the  comptroller's  depart- 
ment.    Texas  Almanac,  1858,  p.  191. 

''House  Journal,  6th  Leg.,  p.  517.  The  Galveston  News,  June  5,  1855, 
thought  the  amount  appropriated  insufficient  to  secure  permanent  navi- 
gation. In  the  issue  of  December  4,  1855,  the  appropriation  is  defended 
as  sufficient  for  securing  permanent  navigation  for  several  hundred 
miles  into  the  interior. 


A  Financml  History  of  Texas  93 

as  a  result  of  this  state  assistance  was  suffered  to  be  lost  during 
the  years  of  the  war  and  the  Reconstruction. 

Expenditures  of  a  character  different  from  the  above  were 
those  for  education  and  the  public  debt,  and  these  will  be  treated 
in  connection  with  the  school  funds  and  the  public  debt. 


Chapter  3. 
the  school  funds.^ 

Xo  system  of  public  schools  arose  during  the  period  of  the 
republic,  but  the  liberal  land  grants  to  education  made  in  1839 
were  recognized  and  continued  by  the  state.  The  Constitution  o  f 
1845  contained  the  following  provisions  in  regard  to  education : 
''The  legislature  shall,  as  early  as  practicable,  establish  free 
schools  throughout  the  state,  and  shall  furnish  means  for  their 
support  by  taxation  on  property ;  and  it  shall  be  the  duty  of  the 
legislature  to  set  apart  not  less  than  one-tenth  of  the  annual 
revenue  of  the  state  derivable  from  taxation  as  a  perpetual 
fund,  which  fund  shall  be  appropriated  to  the  support  of  free 
public  schools;  and  no  law  shall  ever  be  made  diverting  said 
fund  to  any  other  use;  and  until  such  time  as  the  legislature 
shall  provide  for  the  establishment  of  such  schools  in  the  several 
districts  of  the  state,  the  fund  thus  created  shall  remain  as  a 
charge  against  the  state  passed  to  the  credit  of  the  free  common- 
school  fund.  "2 

"All  public  lands  which  have  been  heretofore  granted  or  may 
hereafter  be  granted  for  public  schools  to  the  various  counties, 
or  other  political  divisions  in  this  state,  shall  not  be  alienated  in 
fee,  nor  disposed  of  otherwise  than  by  lease  for  a  term  not 
exceeding  twenty  years  in  such  manner  as  the  legislature  may 
direct."^ 

' '  No  appropriation  of  money  shall  be  made  for  a  longer  term 
than  two  years,"  except  for  purposes  of  education.* 

The  successive  acts 'levying  taxes  carried  out  the  constitutional 
injunction  to  set  aside  to  the  school  fund  one-tenth  of  the  annual 
revenue  of  the  state  derived  from  taxation.     Also   the  act  of 


^For  an  eicellent  summary  of  school  legislation  see  Lane's,  "The 
Educational  System  of  Texas,"  in  Wooten,  A  Comprehensive  History  of 
Texas,  vol.    2,   pp.   424-431,   439-444. 

^Art.  10,  sec.  2. 

'Art.  10,  sec.  3.  Sec.  4  provides  that  the  counties  which  have  not 
received  their  lands  shall  be  entitled  to  receive  the  same  quantity  as 
other  counties. 

*Art.  7,  sec.  8. 


A  Financial  History  of  Texas  95 

January  16,  1850,  provided  that  counties  organized  since  Feb- 
ruary 16,  1846,  or  which  might  thereafter  be  organized,  should 
each  receive  four  leagues  of  land/  The  counties  were  slow  in 
selecting  their  lands,  and  owing  to  the  abundance  of  land  little 
was  derived  from  the  system  of  lease  to  which  they  were  re- 
stricted. ^  A  better  system  of  administration  of  these  lands 
would  have  been  to  have  made  them  a  part  of  the  school  fund 
and  so  subject  to  administration  by  the  state.^  In  subsequent 
legislation  relating  to  the  disposition  of  the  public  lands  the 
school  fund  was  made  the  beneficiary.  During  the  three  years, 
1858-60,  $100,960  was  received  by  the  fund  from  the  sale  of  the 
public  lands  as  authorized  in  1858.* 

The  receipts  from  one-tenth  of  the  taxes  were  small,  and  it 
would  have  taken  an  indefinite  length  of  time  for  an  amount  to 
have  accumulated,  the  income  from  w^hich  would  have  been  worth 
while  to  apportion.  Few  counties  had  established  schools  up 
to  1855,  and  it  was  realized  that  with  the  existing  provisions  the 
establishment  of  a  general  system  of  education  would  long  be* 
delayed.  The  indemnity  bonds  received  from  the  United  States 
provided  very  opportunely  the  means  for  giving  some  needed 
assistance.  By  the  act  of  January  31,  1854,  $2,000,000  of  the 
bonds  were  set  aside  as  a  fund  to  be  called  a  Special  School 
Fund,  the  interest  of  which  should  be  distributed  for  the  sup- 
port of  the  schools.     In  1855  the  first  distribution  was  made. 

The  school  fund  was  made  to  serve  the  double  purpdse  of  fos- 
tering education  and  promoting  internal  improvements.  The 
original  proposal  for  giving  the  $2,000,000  of  bonds  to  the  fund 
was  in  a  bill  introduced  at  the  called  session  of  the  Fourth  Legis- 
lature to  set  aside  that  amount  for  investment  in  railroad  bonds 
for  the  benefit  of  the  school  fund.  This  bill  was  defeated,  but  a 
similar  bill  was  introduced  in  the  Fifth  Legislature  which  met 
in  November,  1853.^     A  majority  of  the  committee  on  education 


^Laws  of  1850,  p.  37. 

*As  late  as  1855  only  954,181  of  the  1,753,488  acres  to  which  the  99 
counties  were  entitled  had  been  selected;  38  counties  had  made  no 
selection.  See  message  of  Governor  Pease,  November  5,  1855;  Senate 
Journal,  6th  Leg.,  p.  15;  also  message  of  December  23,  1853. 

'Message  of  Governor  Pease,  November  5,  1855;  Senate  Journal,  6th 
Leg.,  p.  15. 

*Laws  of  1858,  p.  193. 

^House  Journal,  5th  Leg.,  p.   195. 


96  Bulletin  of  the  University  of  Texas 

to  which  it  was  referred  recommended  its  indefinite  postpone- 
ment, with  the  result  that  the  donation  to  the  fund  was  made 
without  any  condition  as  to  its  investment/  The  sentiment  for 
internal  improvement  was  too  strong  to  be  resisted,  however,  and 
in  1856  the  "Loaning  Act"  was  passed.^  The  governor,  the 
comptroller  and  the  attorney  general  were  constituted  an  ex- 
officio  board  of  school  commissioners  whose  duty  it  was  to  loan, 
under  the  guise  of  investment,  the  5%  United  States  bonds  in 
the  fund  to  railroad  companies  incorporated  by  the  state.  Every 
loan  was  secured  by  six  per  cent  first  mortgage  bonds  of  the 
road,  and  each  company  was  required  to  pay  two  per  cent  each 
year  into  a  sinking  fund  held  in  the  state  treasury.  Loans  were 
made  to  six  companies,  and  the  amount  of  their  bonds  purchased 
by  the  end  of  1860  was  $1,476,000.  Up  to  the  outbreak  of  the 
war  the  conditions  of  the  loans  were  fully  met  in  regard  to 
interest  and  sinking  fund  payments. 

From  1855,  when  the  first  payment  out  of  the  school  fund 
was  made,  until  1861,  a  total  of  $560,015  was  apportioned  among 
the  counties.  This  amount  is  the  total  of  the  money  expenditures 
of  Texas  in  behalf  of  education  during  the  Irwenty-five  years 
preceding  the  Civil  War.  The  per  capita  apportionment  was 
very  small,  being  in  1857  only  $1.21  for  each  child  of  school  age.^ 
After '1857  the  amount  for  apportionment  remained  fairly  uni- 
form, but  as  the  number  of  those  within  the  school  ages  increased, 
the  per  capita  apportionment  decreased.  Receipts  to  the  fund 
were  largely  from  the  interest  on  the  United  States  bonds  held 
by  the  fund.  Little  was  derived  from  taxation,  as  the  state  rate 
was  low;  and  much  less  was  received  from  land  sales.  The 
United  States  Census  of  1850  reported  347  public  schools  with 
358  teachers,  7,869  pupils,  and  an  annual  income  of  $43,878.  All 
of  the  income  was  reported  as  derived  from  sources  other  than 
taxes  or  public  funds.*  By  1860  there  were  1,218  public  schools, 
M'ith  1,274  teachers  and  34,611  pupils.     The  annual  income  was 


'House  Journal,  5th  Leg.,  p.  205.  Act  of  January  31,  1854;  Laws  of 
1854,  p.   17. 

=Laws  of  1856,  Adj.  Sess.,  pp.  31,  57.     Laws  of  1858,  p.  57. 

•^Message  of  Governor  Pease,  November  2,  1857;  House  Journal,  7th 
Leg,,  p.  29. 

^Seventh  Census  of  the  United  States.     1850.     Pp.  508  and  1020. 


A  Financial  History  of  Texas  97 

$414,168,  of  which  $15,847  was  reported  as  derived  from  taxes, 
$58,394  from  public  funds,  and  $339,927  from  other  sources.^ 
There  was  practically  no  special  taxation  for  school  purposes 
before  the  Civil  War,  the  United  States  Census  of  1860  reporting 
only  $1,379  of  school  taxes. - 

Private  schools  and  private  support  of  the  public  schools  were 
much  more  important  relatively  in  ante-bellum  days  in  Texas 
than  at  present.  Thus  in  1850  there  were  97  academies,  with  137 
teachers,  3,389  pupils,  and  an  annual  income  of  $39,384.  In 
1860  the  number  of  academies  remained  unchangfed,  but  there 
were  236  teachers,  5,916  pupils,  and  an  annual  income  of  $142,- 
134.  The  need  of  public  common  school  education  was  very 
great  as  was  shown  by  the  number  of  illiterates.  In  1850  18.1 
per  cent  of  the  white  population  twenty  years  of  age  and  over 
was  illiterate ;  in  1860  the  per  cent  illiterate  of  those  over  twenty 
years  .of  age  was  lO.l."^  All  of  the  slaves  w^ere  illiterate,  but 
their  illiteracy  was  not  a  problem  until  after  the  Civil  War. 

No  public  expenditures  for  higher  education  were  made  during 
this  period,  though  endowments  were  made,  and  steps  were  taken 
toward  the  establishment  of  the  University  of  Texas.  In  1850 
there  was  authorized  a  survey  of  three  leagues  granted  under  the 
act  of  1839,  because  the  field  notes  of  former  surveys  had  been 
lost.*  In  1856  the  legislature  provided  for  the  survey  of  the 
fifty  leagues  granted  to  the  University  by  the  act  of  1839.  Alter- 
nate sections  were  sold  in  lots  of  160  acres  at  public  auction  ta 
the  highest  bidder  at  not  less  than  $3.00  per  acre.  The  sale 
took  place  at  the  county  seat  of  the  county  in  which  the  land  was 
situated.  Purchasers  were  allowed  twenty  years  in  which  to" 
complete  payment,  and  unpaid  installments  bore  8%  interest.^ 


^Eighth  Census  of  the  United  States.  1860.  Vol.  Mortality  and 
Miscellaneous  Statistics,  p.  505.  This  classification  of  receipts  by  the 
Census  is  incorrect,  as  the  report  of  the  state  school  fund  for  1859 
shows  $31,197.34  received  from  state  taxes  and  $117,480.90  distributed 
among  the  counties. 

=Ibid.,  p.  511. 

^Seventh  Census  of  the  United  States.  1850.  P.  513.  Eighth  Census 
of  the  United  States.  1860.  Vol.  Mortality  and  Miscellaneous  Sta- 
tistics, p.  508. 

'Laws  of  1850,  p.  96. 

••Laws  of  1856,  Adj.  Sess.,  pp.  71,  87. 

7— H 


98  Bulletin  of  the  University  of  Texas 

The  University  Act  of  1858  provided  for  the  establishment  of 
the  University  of  Texas;  appropriated  to  the  fund  $100,000  of 
the  indemnity  bonds ;  confirmed  the  grant  of  fifty  leagues  made 
in  1839;  and  in  addition  gave  to  the  University  one  section  in 
every  ten  sections  reserved  for  the  use  of  the  state  under  the 
act  of  1854  which  provided  land  grants  in  aid  of  railroad  con- 
struction.^ The  bonds  remained  intact  in  the  fund  for  two 
years,  when  they  were  diverted  to  the  state  revenue  account. 
From  interest  and  from  sale  of  lands  $31,087  was  derived  by 
this  fund  down  to  1861,  and  $1,641.45  was  expended.  The  Uni- 
versity of  Texas,  however,  was  not  founded  until  twenty-five 
years  later.  Such  higher  education  as  was  provided  in  Texas 
was  supplied  by  private  institutions.  There  were  two  so-called 
colleges  in  1850,  with  seven  teachers,  165  students  and  an  annual 
income  of  $1,000.-  In  1860  there  were  25  institutions  which 
bore  the  name  of  college  with  107  teachers,  2,416  students,  and 
an  annual  income  of  $95,072.^ 


^Laws  of  1858,  p.  148. 

^Seventh  Census  of  the  United  States.     1850.     P.  508. 
^Eighth  Census.     1860.    Vol.  Mortality  and  Miscellaneous  Statistics, 
p.  505. 


Chapter  4. 

RECEIPTS. 

The  provisions  in  the  Constitution  of  1845  relating  to  taxa- 
tion were :  (1)  "  Taxation  shall  be  equal  and  uniform  through- 
out the  state.  All  property  in  this  state  shall  be  taxed  in  pro- 
portion to  its  value,  to  be  ascertained  as  directed  by  law,  except 
such  property  as  two-thirds  of  both  houses  of  the  legislature 
may  think  proper  to  exempt  from  taxation.  The  legislature 
shall  have  the  power  to  lay  an  income  tax,  and  to  tax  all  per- 
sons pursuing  any  occupation,  trade,  or  profession:  Provided 
that  the  term  "occupation"  shall  not  be  construed  to  apply 
to   pursuits  either  agricultural   or  mechanical."^ 

(2)  "The  legislature  shall  have  power  to  provide  by  law  for 
exempting  from  taxation  two  hundred  and  fifty  dollars'  worth 
of  household  furniture  or  other  property  belonging  to  each 
family  in  this  state. '  '^ 

There  was  no  provision  in  the  constitution  of  the  Republic 
of  Texas  enjoining  equality  and  uniformity  of  taxation,  and 
the  result  was  a  mixed  system  of  discriminating  ad  valorem  and 
specific  rates.  The  state  constitution  on  this  point,  however, 
was  patterned  afer  the  Louisiana  constitution  which  was  adopted 
early  in  1845.^  The  exemption  proposed  by  section  twenty-eight 
is  not  found  in  any  other  state  constitution  at  the  time,  and 
appears,  therefore,  to  be  a  contribution  to  constitutional  provi- 
sions relating  to  taxation. 

The  taxes  levied  during  this  first  period  of  statehood  were 
property,  license,  and  poll  taxes,  and  they  will  be  considered  in 
the  order  named. 

A.     The  Property  Tax. 

A  direct  ad  valorem  tax  was  levied  on  all  real  and  personal 
property  except  that  exempted.     The  laws  were  content  with  the 


^Art.  7,  sec.  27. 
*Art.  7,  sec.  28. 

'Louisiana  Constitution,  title  VI,  art.   127.     Journal  of  the  Conven- 
tion   (Texas),  p.  435. 


100  Bulletin  of  the  University  of  Texas 

general  statement  that  all  property  should  be  taxed,  and  entered 
en  no  definitions  or  enumerations  of  real  or  personal  property. 

Certain  property  was  exempt  by  law,  and  the  first  piece  of  tax 
legislation  was  to  exempt  two  hundred  and  fifty  dollars  worth  of 
the  household  furniture  and  other  personal  property  belonging 
to  each  family  in  the  state.^  Later,  property,  including  as  much 
as  sixty  acres  of  land,  devoted  to  educational  or  religious  pur- 
poses, was  exempted,  as  was  also  property,  including  as  much 
as  ten  acres  of  land,  owned  and  occupied  by  charitable  or  lit- 
erary associations.-  Products  of  the  soil  while  in  the  hands 
of  the  producer  were  exempt  from 'taxation  after  1850.^ 

Until  1848  assessment  took  place  between  March  1  and  July 
1,  and  the  property  assessable  was  such  as  was  owned  or  held 
on  March  I.'*  In  1848  the  period  between  January  1  and 
June  l*Avas  chosen,  and  assessment  was  of  property  owned  or 
held  on  January  l."^  In  1850,  however,  a  change  was  made 
from  June  1  to  May  1,  and  this  arrangement  lasted  until  1861.*^ 

In  regard  to  the  place  of  assessment,  a  singular  amount  of 
latitude  was  allowed  and  no  distinction  was  made  between  real 
and  personal  property.'  Throughout  the  period  the  taxpayer 
was  permitted  to  render  for  assessment  in  the  county  of  resi- 
dence, property  lying  in  another  county,  although  this  was  not 
expressly  incorporated  in  the  laws  until  1850.'  In  1860  the 
broad  permission  was  given  to  persons  outside  the  state  who 
owned  land  in  the  state,  to  render  their  land  for  assessment 
to  the  assessor  of  any  county.^  While  this  w^as  the  rule  of  as- 
sessment, the  taxes  accrued  to  the  benefit  of  the  place  of  location 
of  the  property. 

Taxable  property  was  rendered  for  taxation  by  its  owner  or 
by  those  who  held  it  in  a  representative  capacity.     Unrendered 


^Laws  of  1846,    p.    76. 

^Laws  of  1849,  p.  9.     Laws  of  1850,  p.  80. 

^'Laws  of  1850,  p.  211.  Laws  of  1860,  p.  88.  See  Report  of  the 
Finance  Committee;   House  Journal,  3rd  Leg.,  Reg.  Sess.,  p.  562. 

'Laws  of  1846,  p.  349. 

"Laws  of  1848,  p.  197. 

"Laws  of  1850,  p.  210. 

^Laws  of  1846,  p.  349.     Laws  of  1848,  p.  198.     Laws  of  1850,  p.  211. 

■Laws  of  1860,  p.  88.  Railroad,  canal  and  colonization  companies  were 
included  in  this  permission. 


A  Financial  History  of  Texas  101 

property  was  assessed  to  the  owner,  if  he  were  known ;  other- 
wise it  was  assessed  by  description.^ 

The  laws  were  not  explicit  as  to  the  measure  of  valuation  of 
property,  but  used  such  indefinite  expressions  as  "valuation," 
"cash  valuation,"  "true  value,"  and  "average  value."  The 
act  of  May  13,  1846,  simply  said  that  each  pei^on  should  give 
a  list  of  his  property  and  "its  valuation,"  verified  by  oath,  and 
that  the  unrendered  property  of  non-residents  should  be  assessed 
by  the  assessor  at  "its  cash  valuation  and  no  more."-  In  1860 
"true  value"  was  made  the  measure,  but  the  lands  of  non-resi- 
dents were  made  subject  to  rendition  at  the  "average  value" 
of  the  lands  in  the  county  where  situated  for  the  year  next  pre- 
ceding-, this  average  value  beingf  ascertained  from  the  assessment 
rolls  by  the  comptroller  and  furnished  to  the  assessors." 

The  work  of  assessment  and  collection  was  done  in  each  county 
by  one  officer  who  was  called  the  assessor  and  collector.  He 
was  an  elective  officer  and  held  office  for  two  years.  The  official 
oath  he  took  was  laid  down  in  the  constitution  and  was  that 
he  should  execute  his  duties  faithfully.  He  also  gave  bond. 
Failure  to  return  the  assessment  roll  and  malfeasance  were  the 
only  violations  of  his  duty  for  which  there  were  penalites  pre- 
scribed.^ 

Compensation  of  the  assessor  and  collector  for  the  work  of 
assessment  was  on  the  basis  of  the  assessed  taxes.  The  schedule 
was  as  follows:  8%  upon  all  sums  of  $1,000  and  less;  5%  on 
sums  between  $1,000  and  $2,000 ;  4%,  between  $2,000  and  $5,000 ; 
3%,  between  $5,000  and  $10,000;  and  1%  on  all  sums  over 
$10,000.  The  same  percentag'es  were  received  upon  the  taxes 
assessed  for  county  purposes  until  1848,  when  one-half  of  the 
rates  were   allowed. 

In  making  assessments  the  assessor  was  required  to  call  at 
least  once  upon  the  owners  and  representatives  of  property  in 
his  county  and  receive  a  list  of  their  taxable  property.  If  the 
person  sought  to  be  assessed  should  not  be  at  his  usual  place 
of  abode,  a  written  notice  was  left  directing  him  to  make  his 


^Laws  of  1846,  p.  350. 

^Laws  of  1846,  p.  349. 

^Laws  of  1860,  p.  88. 

^Laws  of  1846,  p.  347.     Laws  of  1848,  p.  199.     Laws  of  1850,  p.  212. 


102  Bulletin  of  the  University  of  Texas 

return  to  the  assessor  within  the  prescribed  period  of  assess- 
ment. In  1860  the  personal  call  required  of  the  assessor  was 
done  away  with,  and  the  requirement  which  succeeded  it  was  that 
the  assessor  should  make  known  by  public  advertisement  in 
each  precinct,  and  at  least  ten  days  in  advance,  of  the  time  and 
place  he  would  attend  to  receive  the  lists  of  taxable  property.* 
It  was  required  of  him  to  call  upon  those  who  did  not  attend, 
and  for  this  trouble  he  was  entitled  to  collect  of  all,  except  wid- 
ows, a  fee  of  $1.00. 

The  taxable  list  furnished  by  the  taxpayer  contained  under 
the  act  of  1846  not  only  an  inventory  of  the  taxable  propertj^ 
but  also  its  valuation,  and  all  was  verified  by  oath.-  The  in- 
ventory and  valuation  were  conclusive  as  to  the  taxpayer's  lia- 
bility. In  1848  the  law  was  changred  so  that  only  a  sworn  in- 
ventory was  required  of  the  taxpayers,  the  valuation  being  left 
to  be  determined  between  the  taxpayer  and  the  assessor.  In 
the  event  of  a  disagreement  between  these  parties  over  the  value 
to  be  fixed,  each  party  selected  a  ''respectable  freeholder,"  and 
should  these  disagree  the  arbitrators  themselves  called  in  a  third 
party,  and  the  decision  of  the  majority  was  final. ^  This  remained 
the  rule  until  1860,  when  it  was  made  the  duty  of  the  county 
court  to  inspect  the  rolls  and  correct  to  their  true  value  the 
assessments  of  property  in  the  county.*  This  was  the  beginning 
in  Texas  of  the  method  of  equalization  by  a  county  board.  Prop- 
erty situated  outside  the  county  was  rendered  at  the  average 
value  of  the  lands  in  the  county  in  which  they  were  situated, 
such  average  to  be  ascertained  by  the  comptroller.  Up  to  this 
time  the  assessor  had  had  no  standard  for  the  valuation  of 
outside  property. 

In  the  act  of  1846  provision  was  made  for  the  assessment  of 
the  unrendered  property  of  non-residents  only.  It  was  assessed 
to  the  owner,  if  known,  otherwise  by  description,  and  it  was 
assessed  for  its  ''cash  valuation."  In  1848  all  property  in  the 
county  which  had  not  been  rendered  became  subject  to  assess- 
ment and  valuation  bv  the  assessor.     The  county  clerk  and  the 


^Laws  of  1860,  p.  87. 
=Laws  of  1846. -p.  349. 
^Laws  of  1848,  p.  198. 
'Laws  of  1860,  p.  87. 


A  Financial  History  of  Texas  103 

county  and  district  surveyors  were  expected  to  exhibit  their 
records  and  maps  to  the  assessor  for  his  assistance.  Further 
changes  were  made  in  1850  whereby  the  assessor  had  to  assess 
only  the  unrendered  personal  property  in  his  county.  Unren- 
dered  land  became  subject  to  assessment  by  the  comptroller's 
department,  and  in  order  that  this  might  be  done,  the  general 
land  office  was  required  to  furnish  the  department  with  art 
abstract  of  all  surveyed  lands  in  the  state,  while  the  assessors 
were  required  to  furnish  maps  of  the  towns  in  their  counties. 
The  department  compared  the  assessment  rolls  with  the  ab- 
stracts and  maps,  the  unrendered  land  was  assessed  at  the 
average  value  of  the  surrounding  land,  and  the  assessments 
were  then  forwarded  to  the  assessors  and  collectors.^  The  pen- 
alty for  refusal  or  failure  to  render  property  was  a  fine  of  not 
more  than  $50  nor  less  than  $10.-  Property  not  rendered  was 
subject  to  back  taxation  at  the  rates  in  effect  during  the  years 
it  escaped. 

The  roll  which  was  prepared  by  each  assessor  set  down  in. 
separate  columns  the  names  alphabetically  arranged  of  the  tax- 
able persons ;  the  amount  and  description  of  their  property  ,1 
the  value  of  the  property ;  and  the  amount  of  taxes.  On  or  be- 
fore July  1  three  copies  of  the  rolls  were  prepared,  one  of 
which  was  kept  by  the  assessor,  one  was  deposited  with  the  county 
clerk,  and  one  was  forwarded  to  the  comptroller.  The  assessor 
simply  certified  to  the  rolls ;  he  was  not  required  to  swear  that 
he  had  done  his  duty.  It  was  doubtless  thought  that  the  oath 
which  he  took  when  he  assumed  office  was  sufficient.  Willful 
failure  or  refusal  to  make  and  return  the  rolls,  or  making  out 
and  returning  an  unfair  roll  constituted  malfeasance  in  office, 
and  the  penalty  was  a  forfeit  of  double  the  damage  sustained 
by  the  state,  and  this  penalty  was  recoverable  of  the  assessor 
or  his  bondsmen. 

The  work  of  assessment  and  collection  was  done  by  the  same 
official,  and  the  same  graduated  compensation  was  allowed  him 
for  collection  as  for  assessment.     After  1850,  five  cents  a  mile 


^Laws   of   1850,   pp.    213,   215. 

=Laws  of  1846,  p.  350.     Laws  of  1848,  p,  197.     Laws  of  1850,  p.  211. 


104  Bulletin  of  tJie  University  of  Texas 

each  way  was  allowed  for  traveling  to  the  seat  of  government 
for  the  purpose  of  settling  accounts. 

Under  the  law  of  1846  payment  of  taxes  was  required  to  be 
made  by  January  1,  and  returns  by  the  collector  to  the  state  and 
county  treasuries  were  required  to  be  made  by  the  same  date.^ 
In  1848  the  law  was  changed  so  that  payment  of  taxes  should  be 
made  by  November  1  and  returns  to  the  treasury  by  December  1.- 
The  inconvenience  to  farmers  of  the  date  November  1  led  in 
1850  to  a  change  to  March  1,  and  to  the  December  1  following 
for  non-residents.^  The  provisions  in  regard  to  payments  into 
the  state  treasury  were  also  changed.  Reports  were  required 
to  be  made  to  the  comptroller  every  three  months  as  to  the  col- 
lections of  state  taxes,  and  the  assessor  and  collector  was  sub- 
ject to  draft  for  the  amounts  reported.  Payment  of  county  tax 
collections  had  to  be  made  to  the  county  treasurer  every  three 
months.  Returns  to  the  treasury  of  both  state  and  county  col- 
lections were  required  to  be  in  by  July  1  until  1854,  when  June 
1  became  the  date.*  Until  1860  no  notice  of  the  collector's  visit 
had  to  be  given,  but  in  that  year  it  was  prescribed  that  he 
should  give  ten  days  notice  of  the  time  and  place  he  would 
attend  in  each  precinct  for  the  collection  of  taxes. 

Until  1850  the  exchequer  bills  issued  by  the  Republic  of 
Texas  w^ere  legal  tender  in  payment  of  taxes,  but  after  1850 
only  specie  was  receivable.^  The  law  as  to  the  place  of  payment 
of  taxes  underwent  frequent  changes.  Under  the  law  of  1846 
taxes  on  outside  property  could  be  paid  in  the  county  of  the 
residence  of  the  owner,  or  in  the  county  of  the  situs  of  the 
property,  or  to  the  comptroller.  In  1848  the  law  was  changed 
so  that  payment  could  be  made  only  in  the  county  of  the  situs 
of  the  property  or  to  the  comptroller.  The  comptroller  trans- 
mitted to  the  counties  the  amounts  due  them.  The  difficulties 
experienced  by  non-residents  in  finding  trustworthy  persons  or 
agencies  to  carry  the  money  for  taxes  led  in  1850  to  a  return  to 
the  methods  provided  for  in  1846. 


^Laws  of  1846,  pp.  352,  355. 

'^Laws  of  1848,  pp.  200,  201. 

^Report  of  the  Comptroller,  1848-1849.     Laws  of  1850,  pp.  214,  215. 

"Laws  of  1854,  p.  73. 

"^Laws  of  1846,  p.  355.     Laws  of  1848,  p.  201.     Laws  of  1850,  p.  216. 


A  Financial  History  of  Texas  105 

Neglect  or  refusal  to  pay  taxes  by  the  date  set  was  followed 
by  a  levy  upon  and  sale  of  as  much  property  of  the  delinquent 
as  was  to  be  found  in  the  county  and  to  an  amount  sufficient  to 
pay  the  taxes  and  costs.^  Execution  was  made  by  the  assessor 
and  collector,  and  his  tax  list  was  credited  to  be  sufficient  au- 
thority for  the  act.  Thirty  days  notice  of  the  time  and  place 
of  sale  had  to  be  given  in  several  public  places.  The  sale  took 
place  at  public  auction,  and  a  deed  given  by  the  assessor  and 
collector  was,  when  recorded,  prima  facie  evidence  that  all  the 
requirements  of  the  law  for  making  the  sale  had  been  complied 
with.  Until  1850,  redemption  of  property  sold  for  taxes  could 
be  made  by  the  owner  within  one  year  of  sale  by  payment  of 
double  the  amount  of  taxes  and  the  casts  of  sale;  but  in  1850 
the  period  within  which  redemption  could  be  made  was  extended 
to  two  years. 

To  cover  the  case  of  removal  from  the  county  without  having 
paid  the  taxes  assessed  and  without  leaving  sufficient  taxable 
property  to  satisfy  the  taxes  due,  the  act  of  1846  provided  that 
the  assessor  and  collector  should  certify  such  delinquency  to  the 
assessor  and  collector  of  the  county  to  which  the  delinquent  had 
removed  and  that  collection  or  levy  and  sale  should  take  place 
in  the  latter  county.  This  provision  is  not  to  be  found  in  the 
law  of  1848  or  in  subsequent  laws,  and  the  reason  for  its  absence 
was  no  doubt  that  such  delinquents  were  generally  persons  with- 
out property,  except  for  a  little  personalty,  so  that  not  only  would 
collection  work  a  hardship  but  also  the  amount  which  might 
be  collected  would  not  repay  the  trouble. 

The  legislation  of  1846  and  the  years  closely  following  has 
been  given  in  considerable  detail  in  order  that  there  might  be  a 
full  understanding  of  the  system  of  property  taxation  established 
at  the  beginning  of  statehood.  It  is  surprising  how  few  changes 
have  been  made  in  the  system  even  after  more  than  fifty  years 
of  its  unsuccessful  operation.  In  describing  the  legislation  the 
writer  is  under  no  delusion  that  the  tax  system  on  the  statute 
books  was  to  the  letter  the  one  in  operation.     The  description 


'Laws  of  1846,  p.  352.    Costs  were  not  provided  for  in  the  act  of  1846. 
but  they  were  in  the  act  of  1848. 


106  Bulletin  of  tJie  University  of  Texas 

of  the  legislation  is  therefore  followed  by  an  account  of  the 
property  tax  in  operation.^ 

The  rate  of  taxation  for  state  purposes  was  low  and  the  per- 
centage of  assessed  value  to  true  value  was  high  during  the 
period  1846-1860.  From  1846  to  1850  the  rate  was  twenty  cents 
on  the  one  hundred  dollars'  valuation;  from  1850  to  1858,  fifteen 
cents;  and  from  1858  to  1861,  twelve  and  one-half  cents.  The 
United  States  Census  of  1850  reported  that  assessed  values  were 
96%  of  true  values,  and  the  census  of  1860  gave  assessed  values 
as  73%  of  true  values.^ 

Contemporaneous  Avith  the  rate  of  20  cents,  assessed  values 
increased  41% ;  but  between  1849  and  1858,  or  the  period  of  the 
rate  of  15  cents,  the  increase  in  the  value  of  assessed  property 
was  308%,  and  between  1858  and  1861,  the  period  of  the  121/2 
cents  rate,  the  increase  was  60%.     A  number  of  circumstances 


^In  a  study  of  the  operation  of  this  tax  little  assistance  can  be  got 
from  the  reports  of  receipts  as  given  by  the  comptroller  or  the  treas- 
urer. The  receipts  from  all  taxes  are  lumped  together  in  the  reports 
of  these  officials. 

=^The  assessed  value  of  property  on  June  1,  1850,  was,  according  to  the 
United  States  Census,  $51,027,456;  the  real  or  true  value  was  $52,740,473; 
Abstract  of  Seventh  Census.  1850.  P.  46.  The  Compendium  of  the 
Seventh  Census  (p.  190),  however,  gives  the  value  of  the  real  property 
in  1850  as  $28,149,671,  the  value  of  the  personal  property  as  $25,414,000, 
or  a  total  value  of  $53,563,671,  and  a  true  value  of  $55,362,340.  The 
values  given  in  the  Compendium  probably  are  those  returned  by  indi- 
viduals, while  the  values  given  in  the  Abstract  are  based  on  official 
state  records.  The  assessed  value  of  property  in  1850  as  given  by  the 
state  comptroller  was  $51,814,615,  but  his  figures  probably  include 
assessed  values  of  counties  which  had  not  been  returned  at  th^  time 
the   census  was   taken. 

The  assessed  value  of  real  estate  as  ascertained  by  the  census  of 
1860  was  $112,476,013,  the  assessed  value  of  personal  property  was 
$155,316,322.  The  true  value,  according  to  the  census  officials,  was 
$365,200,614.  Eighth  Census  of  the  United  States.  1860.  Vol.  Mor- 
tality and  Miscellar.eous  Statistics,  p.  294.  The  value  of  real  estate 
on  June  1,  1860.  as  returned  by  individuals  to  the  census  officials  was 
$191,166,301;  the  value  of  personal  property  was  $261,984,452,  or  a 
to^al  of  $453,150,753.  Ibid.,  p.  319.  The  assessed  value  of  property  in 
1860  as  reported  by  the  state  comptroller  was  $294,315,639.  The  dif- 
ference between  the  census  figure  of  assessed  values  and  the  comp- 
troller's figure  was  due  probably  to  the  difference  in  time  of  taking 
the  two  official  records. 


A  Financial  History  of  Texas  107 

contributed  to  explain  the  increase  in  assessed  values.  The 
change  in  the  law  in  1850  whereby  unrendered  lands  were 
assessed  through  the  comptroller's  department  led  to  a  better 
assessment  of  the  property  of  non-residents.  The  relinquish- 
nlent  to  the  counties  of  nine-tenths  of  the  state  taxes  between 
1852  and  1858  reduced  the  general  weight  of  taxation.  The  in- 
crease was  due  largely,  however,  to  the  growth  of  population 
and  wealth.  Between  1850  and  1860,  the  white  population  in- 
creased from  154,034  to  421,294,  and  the  number  of  slaves  from 
58,161  to  182,566.  The  cash  value  of  farm  lands  and  buildings 
increased  from  $16,550,008  in  1850  to  $88,101,320  in  1860,  and 
the  value  of  real  and  personal  property  increased  from  $55,362,- 
340  to  $453,150,753. 

The  wealth  of  the  state  consisted  of  those  visible,  tangible 
objects  which  might  be  expected  to  be  found  in  a  community 
wholly  agricultural.  Land,  slaves,  and  livestock  made  up  95.2 
per  cent  of  the  total  assessments  in  1846,  and  90.2  per  cent  in 
1860.  Loaned  money  was  the  chief  intangible  item  and  con- 
stituted only  nine-tenths  of  one  per  cent  of  the  total  assessment 
in  1849,  and  1.4  per  cent  in  1859.  Money  loaned  was  subject 
throughout  the  period  to  a  special  tax  of  20  cents  on  the  $100, 
but  this  was  levied  not  as  a  property  tax,  but  as  a  license  tax. 
This  was  not  a  hard  tax  to  bear  since  the  interest  rate  varied 
from  10%  to  20%.^  The  number  of  money  lenders  assessed 
rose  from  255  in  1849  to  3,053  in  1859,  and  the  amount  assessed 
increased  from  $120,315  to  $3,330,038.^  The  amount  of  credits 
which  were  assessed  is  not  reported  for  this  period.  The  absence 
in  official  reports  and  messages  and  in  newspapers  of  complaint 
of  evasion  of  taxation  by  money  and  credits  indicates  that  their 
assessment,  if  a  problem,  was  not  acute.  Nor  was  corporation 
taxation  a  problem.  The  general  property  tax  was  the  only 
business  tax,  except  the  ordinary  license  taxes  upon  those  en- 
gaged in  merchandise,  liquor,  and  other  occupations.  There 
were  no  railroads  before  1854;  there  were  only  stage  coaches 
and  steamboats.  There  was  not  only  no  special  taxation  pre- 
scribed for  these,  but  their  assessments  under  the  general  prop- 
erty tax  were  not  particularized,  and  so  details  as  to  their  taxa- 


'Texas  Almanac,  1858,  pp.  61,  65;   ibid.,  1859,  p.  182. 
''Reports   of  the   comptroller,   1849,   1859. 


108  Bulletin  of  the  University  of  Texas 

tion  are  not  ascertainable.  The  incorporation  of  state  banlcs 
was  prohibited  by  the  constitution,  and  the  only  banks  in  the 
state  were  private  banks  and  one  or  two  banks  which  had  been 
chartered  by  the  republic.  Accordinsr  to  the  United  States  Cen- 
sus of  1860,  there  was  only  one  bank  in  Texas,  and  that  was  a 
small  one  in  Galveston/  Evidently  the  general  property  tax  and 
the  license  tax  upon  money  loaned  were  thought  sufficient  for 
the  taxation  of  banks. 

The  weakness  of  the  tax  system  was  not  the  failure  to  tax 
corporations  or  to  reach  personalty,  but  it  was  the  escape  of 
land  both  from  assessment  and  from  proper  valuation.  The 
difficulty  that  existed  as  to  the  taxation  of  land  was  due  to  the 
enormous  extent  of  non-resident  holdings.  In  1852,  for  example,^ 
in  twenty-four  out  of  eighty-three  counties  reporting,  the  land 
outside  the  county  rendered  for  assessment  was  greater  than 
that  within ;  and  in  only  six  of  the  twenty-four  were  the  assessed 
values  of  the  outside  holdings  larger  than  those  for  the  lands 
within.-  It  was  permitted  to  render  outside  holdings  in  the 
county  of  residence,  and  this  opened  the  way  for  non-rendition 
and  undervaluation.  Under  the  law  of  1846  assessors  were  re- 
quired to  make  a  separate  return  to  the  comptroller  of  the  rendi- 
tions of  outside  holdings,  accompanying  the  returns  with  a  de- 
scription' of  each  piece  of  land  rendered.-^  Each  assessor  wa^s 
also  required  to  make  a  return  of  all  property  in  his  county 
not  rendered  for  assessment,  accompanied  by  a  description  and 
valuation  of  each  piece.  The  comptroller  compared  the  returns 
to  ascertain  what  lands  were  uncovered  by  other  returns,  and 
advised  each  assessor  of  the  lands  in  his  county  which  had  not 
been  rendered  elsewhere.  Because  of  labor  and  trouble  involved 
in  getting  from  the  surveyors'  files  a  description  of  the  un- 
rendered  lands,  many  assessors  made  no  effort  to  assess  them ; 
and  often  when  assessments  were  made  they  could  not  be  used  by 
the  comptroller  because  the  records  or  descriptions  were  imper- 
fect.*    The  chaotic  situation  was  taken  advantage  of  bv  land- 


'Vol.  Mortality  and  Miscellaneous  Statistics,  p.  29. 

^Compiled  from  the  Report  of  the  Comptroller,  1852-3.  Galveston 
County  in  1852  reported  89,896  acres  assessed  within  the  county  and 
2,236.950  acres  out  of  the  county;  Nacogdoches  County  reported  440,660 
acres  assessed  within  and  1,919,686  acres  without  the  county. 

•Laws  of  1846,  p.  350. 

*Report  of  the  Comptroller,  1847;   House  Journal,  2nd  Leg.,  p.  44. 


A  Financial  History  of  Texas  109 

owners  and  evasion  was  rife.  In  184^  the  number  of  acres 
assessed  was  32,890,887,  while  the  amount  of  patented  and  deeded 
land  in  the  state  was  45,234,987  acres/  In  1850  the  law  was 
changed  so  that  the  comptroller  became  possessed  of  both  county 
and  town  maps  and  so  became  enabled  to  compare  the  returns 
with  the  maps  of  each  county  and  as  a  result  determine  what 
lands  had  not  been  rendered.  The  amount  of  land  assessed  in- 
creased by  more  than  five  million  acres  in  the  year  following 
this  change  in  the  law,  while  for  the  five  preceding  years  it  had 
remained  practically  stationary.  The  change  in  the  law  may 
have  accounted  for  some  of  this  increase,  but  the  law  imposed  too 
huge  a  task  upon  the  comptroller's  department.  Maps  and 
other  data  were  not  kept  up,  and  the  most  important  evidence 
of  the  breakdown  of  the  system  is  that  there  was  little  change 
in  the  number  of  acres  assessed  after  1855,  though  this  was  a 
period  when  land  was  being  constantly  patented.- 

The  conditions  with  respect  to  valuation  was  no  better  than 
those  of  rendition.  Valuation  was  made  where  the  property 
was  rendered,  but  the  machinery  for  revision  of  values  existed 
in  the  county  where  the  property  was  located.  It  was  impossible 
for  an  assessor  to  know  the  relative  value  of  land  in  the  various 
and  distant  parts  of  the  state  and  the  inevitable  result  was 
undervaluation.''  .  The  plan  of  a  minimum  value,  per  acre,  such 
as  existed  under  the  republic,  was  suggested,  but  was  not  adopted.'* 

The  situation  as  to  evasion  of  taxation  was  aggravated  by  a 
loss  of  confidence  in  tax  titles.  The  law\s  relating  to  the  sale  of 
property  for  taxes  were  minutely  drawn  and  unless  every  detail 
were  carried  out  by  the  officials  in  charge  of  the  assessment  and 
collection  of  the  taxes  and  of  the  levy  upon  the  property  the 

^Report  of  the  Comptroller,  1848-9,  p.  7. 

-Report  of  the  Comptroller,  1856-7,  p.  22;  1858-9,  p.  16.  Message 
of  Governor  Runnels,  November  10,  1859;  House  Journal,  8th  Leg., 
p.  42.  Message  of  Governor  Houston,  January  13,  1860;  House  Journal, 
8th  Leg.,  p.  397.  In  1856  out  of  over  68,000,000  acres  of  patented  land, 
only  44,110,437  were  assessed;    House  Journal,  7th  Leg.,  p.   483. 

■'■Report  of  Joint  Select  Committee  on  Taxation;  House  Journal,  7th 
Leg.,  p.  483.     See  also  references  in  preceding  note. 

^Report  of  the  Comptroller,  1856-7,  p.  19. 


110  Bulletin  of  tlie  University  of  Texas 

courts  would  not  sustain  the  title. ^  The  frequency  with  which 
they  were  not  sustained  contributed  to  neglect  of  rendition  and 
of  payment.-  The  failure  of  land  which  was  assessed  outside 
the  county  of  situs  to  pay  its  share  of  the  taxes  became  a  sub- 
ject of  increasing  complaints  and  led  a  joint  select  committee 
of  the  house  and  senate  which  was  appointed  to  examine  the  tax 
laws  to  pronounce  the  system  of  taxation  a  "farce"  in  its 
operation.^ 

An  estimate  of  arrearages  and  of  costs  of  assessment  and  col- 
lection of  ad  valorem  taxes  can  be  made  by  comparing  assess- 
ments and  receipts  of  several  years.  The  taxes  assessed  one  year 
were  not  as  a  rule  paid  into  the  treasury  until  the  following  fiscal 
year.  The  assessments  of  1846  and  1847  amounting  to  $214,103 
should  have  been  paid  by  the  end  of  the  fiscal  year  1848,  but 
only  $150,616  was  received.  Arrears  and  costs  amounted  to 
about  30%.  The  assessments  of  1858  were  $294,758  but  the 
receipts  of  1859,  including  back  taxes,  were  $221,231,  showing 
arrears  and  costs  of  over  25  per  cent.  In  1848-9  the  estimated 
cost  of  assessment  and  collection  was  13i/^  per  cent ;  delinquency 
amounted  to  from  121/2  per  cent  to  16%  per  cent. 

Taxation  as  a  source  of  revenue  was  not  important  during  the 
greater  part  of  this  period.  The  state  was  sustained  in  the  first 
year  of  its  history  by  the  revenue  which  had  accrued  under  the 
laws  of  the  republic,  and  after  1850  the  indemnity  bonds  were 
used.  From  1852  to  1858  nine-tenths  of  the  state  taxes  were 
relinquished  to  the  counties,  and  as  the  rate  was  only  12% 
cents  in  1858,  the  bonds  continued  to  be  the  chief  dependence  of 
the  state  government. 

By  the  act  of  February  13,  1852,  it  was  provided  that  inas- 
much as  many  of  the  counties  w^ere  in  debt  and  were  in  need 
of  courthouses,  jails,  jury  funds  and  the  like,  nine-tenths  of  the 
state  tax  on  the  assessments  of  1852  and  1853  should  be  re- 
linquished to  the  counties  where  the  tax  was  assessed,  the  re- 


^Yenda  v.  Wheeler,  9  Tex.,  408  (1853).  Pitts  v.  Booth,  15  Tex., 
453    (1855). 

^Report  of  the  Comptroller,  1858-9,  p.  17.  In  the  report  for  1848-9 
the  comptroller  stated  that  probably  one-third  of  non-resident  assess- 
ments would  not  be  paid  and  would  have  to  be  secured  by  a  sale  of 
property. 

^House  Journal,  7th  Leg.,  p.  483. 


A  Finmicial  History  of  Texas  111 

maining  one-tenth  to  be  paid  into  the  state  treasury  for  the 
benefit  of  the  school  f  und.^  Again  in  1854  and  1855  relinquish- 
ment was  made  to  the  counties  where  the  taxes  were  assessed, 
but  in  1856  and  1857  relinquishment  was  made  for  the  benefit  of 
the  counties  where  the  property  was  situated.-  The  act  of  1854 
was  vetoed  because  the  governor  thought  that  the  counties  in 
which  the  property  was  located  should  get  the  benefit,  but  the 
veto  was  nullified  by  a  two-thirds  vote  of  the  legislature.  The 
act  of  1856  also  was  vetoed  for  the  same  reason,  but  was  passed 
over  the  veto.  This  policy  of  relinquishment  was  unequal  in  its 
operation  and  was  carried  too  far.  The  counties  in  which  there 
were  large  assessments  of  property  situated  outside  their  bound- 
aries profited  unjustly  at  the  expense  of  the  counties  in  which 
the  property  was  located.^  The  counties  which  were  favored 
were  the  richer  counties,  and  those  most  discriminated  against 
were  the  frontier  counties."*  The  policy  was  followed  longer  than 
was  necessary  to  secure  in  the  majority  of  the  counties  the  pur- 
poses for  which  relinquishment  was  made.  After  1855  a  better 
policy  would  have  been  to  have  relinquished  the  taxes  only  to  the 
frontier  and  the  new  counties. 

B .     Business .  Taxes. 

The  property  tax  was  a  business  tax  inasmuch  as  it  applied 
to  the  real  and  personal  property  which  was  employed  in  any 
business.  In  fact,  the  property  tax  was  the  only  business  tax, 
except  license  or  occupation  taxes  upon  certain  occupations. 

Payment  of  the  occupation  tax  levied  by  the  state  was  made 
to  the  assessor  and  collector  of  taxes,  and  the  license  was  issued 
by  the  county  clerk  upon  presentation  of  the  tax  receipt.'^  Until 
1848  the  shortest  time  for  which  a  license  could  be  issued  was 
one  year,  but  in  1848  four  months  were  made  the  minimum 
period.  Under  the  act  of  1846  failure  or  refusal  to  pay  the  tax 
subjected  the  person  to  a  forfeiture  of  double  the  amount  of  the 


^Laws  of  1852,  p.  93. 

^Laws  of  1854,  p.  30.     Laws  of  1856,  Adj.  Sess.,  p.  43. 

•Veto  message  of  Governor  Pease,  January  21,  1854. 

^Brazoria,  Fort  Bend,  Galveston,  Matagorda  and  Nacogdoches  were 
counties  which  had  in  1852  the  largest  excess  of  outside  holdings,  .and 
they  were  also  the  richest  counties. 

''Laws  of  1846,  p.  357.     Laws  ot  1848,  p.  203.     Laws  of  1850,  p.  218. 


112  Bulletin  of  tJie  University  of  Texas 

tax  for  each  month  in  which  the  business  was  engaged  in  \v\-th- 
out  a  license,  and  recovery  of  this  penalty  was  by  suit  brought 
in  a  court  of  proper  jurisdiction/  From  1848  to  1858,  only  the 
amount  of  the  tax  was  recoverable,  and  the  delinquent 's  property 
could  be  levied  upon  and  sold  for  that  purpose.  In  1858  the 
penalty  of  double  the  amount  of  the  tax  was  restored. 

Practically  all  occupations,  except  agricultural  and  mechanical, 
were  taxed.  Lawyers  and  doctors  were  taxed  $5  annually  until 
1848,  when  the  tax  was  repealed.  •  The  taxes  on  the  merchandise 
and  liquor  occupations  were  the  most  important.  Under  the 
act  of  April  28,  1846,  wholesale  merchants  were  taxed  $100  on 
each  establishment;  retail  merchants,  $25;  dealers  in  spirituous 
liquors  in  quantities  of  a  quart  or  over,  $25 ;  dealers  in  quantities 
of  less  than  a  quart,  $50.-  This  method  of  a  uniform  charge 
irrespective  of  the  amount  of  capital  employed  in  the  business 
was  thought  to  operate  unequally  upon  the  small  dealer  and  to 
lead  to  the  concentration  of  business  in  the  towns  and  in  the 
hands  of  a  few  persons.-'  In  1848  the  law  was  changed  in  order 
to  meet  these  objections,  and  there  was  levied  a  tax  of  one-fifth  of 
one  per  cent  on  the  purchases  of  wholesale  and  retail  merchants 
and  of  dealers  in  spirituous  liquors  in  quantities  of  a  quart  or 
more.'*  The  assessor  was  required  to  call  upon  dealers  at  least 
every  three  months  to  get  the  returns  of  purchases.  Failure  to 
make  true  returns  made  the  offender  liable  to  a  fine  of  $50.  This 
special  tax  was  in  addition  to  the  ad  valorem  tax  on  the  prop- 
erty, including  the  stock  in  trade,  of  the  taxpayers.'^  The  imme- 
diate residt  of  the  law  of  1848  was  a  decrease  in  receipts  from 
the  occupation  tax  which  amounted  to  32  per  cent  in  1848  as 
compared  with  the  receipts  of  1847,  and  to  23  per  cent  in  1849 
as  compared  with  receipts-  of  1848.  The  receipts  from  liquor 
dealers  and  merchants  were  nearly  equal  until  1855,  but  in  that 


^Aulanier  v.  the  Governor,  1  Tex.,  653  (1846);  State  v.  Bock,  9  Tex., 
369    (1853). 

-Laws  of  1846,  p.  146. 

^Report  of  the  Committee  on  Finance;  House  Journal,  2nd  Leg.,  pp. 
318-320. 

^Laws  of  1848,  p.  151.  Laws  of  1858,  p.  258.  State  v.  Stephen,  4 
Tex.,  140    (1849). 

''Laws  of  1848,  p.  152. 


A  Financial  History  of  Texas  113 

year  an  anti-liquor  movement  over  the  state  cut  down  retail 
establishments  and  lessened  the  receipts  from  the  liquor  taxes.* 
The  receipts  from  occupation  taxes  fluctuated  from  year  to 
year  and  they  constituted  only  11.5  per  cent  of  the  assessed  taxes 
to  1860.  The  system  of  taxing'  according  to  purchases  provided 
an  opportunity  for  evasion,  and  the  conclusion  was  in  1861  that 
the  law  utterly  failed  of  its  purpose.^ 

C.     rJie  Poll  Tax. 

Prom  1846  to  18-18  a  poll  tax  of  $1.00  was  levied  up)on  every 
free  male  person  between  the  ages  of  21  and  60,  Indians  and 
persons  non  compos  mentis  excepted.^  In  1848  the  age  limits 
were  made  21  and  dd^  In  1858  the  tax  was  reduced  to  fifty 
cents,  and  the  maximum  age  limit  was  changed  to  50.^  There 
were  15,310  persons  assessed  for  the  tax  in  1846,  and  53,376  in 
1859.  The  United  States  Census  of  1850  reported  for  Texas  a 
white  male  population  between  the  ages  of  20  and  60  of  38,692, 
and  the  census  of  1860  reported  one  of  91,197  between  the  ages 
of  20  and  50.  Those  assessed  for  the  tax  in  1859  were  approxi- 
mately 58  per  cent  of  those  who  were  liable.  The  poll  taxes 
assessed  from  1846  to  1860  constituted  9.8  per  cent  of  the  total 
assessed  taxes. 

The  receipts  from  all  the  different  taxes  levied  by  the  state, 
the  counties,  the  towns,  and  other  taxing  districts,  amounted  in 
1852  to  $131,313,  divided  as  follows :  state,  $74,936 ;  county,  $35,- 
055;  all  others,  $21,332.«  The  census  does  not  tell  from  what 
taxes  these  receipts  were  derived.  In  1860  the  total  tax  receipts 
of  the  different  taxing  jurisdictions  were  $533,265,  divided  as 
follows:  state,  $298,859;  counties,  $208,053;  towns  and  cities, 
$24,409;  school  and  miscellaneous,  $1,944."     Not  much  reliance 


'Report  of  the  Comptroller,  1854-5,  p.  13;  1858-9,  p.  14.  Also  message 
of  Governor  Pease,  November  5,  1855;  Senate  Journal,  6th  Leg..  Reg. 
Sess.,  p.  12. 

-Report  of  the  Comptroller,  1860-1,  p.  105. 

^Laws  of  1846,  p.  146. 

^Laws  of  1848,  p.  151. 

'Laws  of  1858,  p.  258. 

''Compendium   of  the   Seventh   Census  of  the  United   States,   p.   190. 

'Eighth  Census  of  the  United  States.  1860.  Vol.  Mortality  and  Mis- 
cellaneous Statistics,  p.  511. 

8— H 


114  Bulletin  of  tlie  University  of  Texas 

can  be  put  in  the  amount  reported  for  towns  and  cities,  foi*  it  is 
obviously  too  small.  There  were  forty-two  towns  and  cities  in 
Texas  in  1860  with  populations  ranging  from  about  100  to  over 
8,000,  and  it  is  absurd  to  believe  that  their  total  tax  bill  was 
only  $24,409.  The  explanation  for  the  small  amount  reported 
may  be  that  the  census  has  included  under  county  tax  receipts 
some  receipts  which  belong  to  towns  and  cities. 

D.     Receipts  froyn  Other  Sources. 

Of  great  importance  to  the  state  in  the  first  year  of  its  history 
were  the  receipts  on  account  of  the  revenue  due  the  Republic 
of  Texas.  The}^  amounted  to  $125,993,  and  are  to  be  compared 
with  about  $58,000  of  receipts  on  account  of  state  revenue 
laws.^  The  state  received  from  1846  to  1856  on  account  of  the 
revenue  laws  of  the  republic,  $161,722  in  specie.-  As  the  first 
years  of  statehood  were  very  lean  years,  these  specie  receipts 
came  in  most  opportunely.^ 

The  public  lands  were  a  source  of  but  small  cash  receipts 
during  this  first  period  of  statehood,  unless  the  cession  of  the 
northwestern  territory  to  the  United  States  be  considered  a 
sale  of  land  and  the  $12,750,000  in  United  States  bonds  and 
cash  be  regarded  as  the  purchase  price.  The  cash  receipts  from 
individuals  were  small  because  the  first  general  provision  for 
the  sale  of  the  lands  was  not  made  until  February  11,  1858,  and, 
furthermore,  the  paper  liabilities  of  the  republic  were  made 
receivable  in  payment  of  the  fees  and  dues  charged  by  the 
general  land  office.'*  The  act  of  1858  fixed  the  price  of  land 
at  $1  per  acre,  except  in  the  islands  and  in  the  alternate  sections 
in  the  railroad  surveys  and  in  the  surveys  of  the  Galveston  and 
Brazos  Navigation  Company  the  price  was  $1.25  per  acre,  and 
in  the  Memphis,  El  Paso  and  Pacific  grant,  where  the  price  was 


^In  Cocke  v.  Calkin,  1  Tex.,  542  (1846),  it  was  decided  that  the 
laws  of  the  republic  regulating  imposts  existed  in  force  until  February 
16,  1846;  but  this  was  overruled  by  the  United  States  Supreme  Court  in 
Calkin  v.  Cocke,  14  Howard,  227.  The  sum  involved  in  this  case 
was  about  $7,000. 

-Classification  of  receipts  of  this  character  ceases  in  1856. 

•Report  of  the  Comptroller,  1847;    House   Journal,  2nd  Leg.,  p.  42. 

*Laws  of  1849,  p.  23. 


A  Financial  History  of  Texas  115 

$2  per  acre.^  The  receipts  went  to  the  school  fund,  but  they 
were  small  because  the  prices  fixed  were  too  high.  Land  was 
superabundant  and  the  market  price  was  probably  nearer  50 
cents  than  $1  per  acre.^  Pre-emption  privileges  were  accorded 
by  the  laws  during  this  period,  except  between  August  15,  1856, 
and  February  10,  1858. 

The  act  of  February  11,  1850,  authorized  the  payment  of  the 
public  debt  in  land  scrip  at  the  rate  of  50  cents  per  acre,  but 
the  creditors  refused  to  take  advantage  of  the  act.  The  most 
important  legislation  affecting  the  public  lands  during  this 
period  was  the  adoption  of  the  policy  of  land  grants  to  rail- 
roads. The  act  of  January  30,  1854,  granted  to  any  company 
constructing  twenty-five  miles  or  more  of  railroad  sixteen 
sections  of  land  for  every  mile  of  completed  road.^  The  expense 
of  surveying  the  lands  fell  upon  the  railroads,  and  in  this  way 
the  state  secured  without  expense  the  survey  of  the  alternate 
sections  which  it  retained.  The  act  of  February  3,  1854, 
granted  land  for  the  construction  of  sea  vessels  in  the  state.^ 
There  were  also  grants  for  the  boring  of  artesian  wells  between 
the  Nueces  and  Rio  Grande  rivers,  and  it  has  been  said  of  them 
that  they  were  ''one  of  the  numerous  schemes  for  wasting  the 
public  domain  afterwards  so  prolific. "° 

In  1856  the  approval  of  the  commissioner  of  claims  was 
required  for  all  bounty  and  donation  certificates  which  had  not 
been  patented,  and  in  1858  it  was  provided  that  all  claims  for 
land  for  military  services  should  be  presented  to  the  commis- 
sioner of  claims  on  or  before  September  1,  1858,  or  be  forever 
barred.  In  1860  the  date  beyond  which  claims  could  be  barred 
was  made  June   1,  1861.^ 

The  policy  of  homestead  grants,  which  had  been  applied  in 
1838  to  a  military  road  reservation,  was  expanded  during  this 
period.     In  1853  an  amendment  to  the  pre-emption  law  of 


^Laws  of  1858,  p.  193. 
^Report  of  the  Comptroller,  1860-1,  p.  101. 
^Laws  of  1854,  p.  11. 
*Laws  of  1854,  p.  34. 

^Wooten,  A  Comprehensive  History  of  Texas,  vol.  1,  p.  833.     Laws  of 
1858,  pp.  84,  130. 

"Laws  of  1856,  p.  14.     Laws  of  1858,  p.  40.     Laws  of  1860,  p.  48. 


■ 


116  Bulletin  of  tlie  University  of  Texas 

January  22,  1845,  accorded  to  settlers  under  that  act  the 
privilege  of  claiming  a  homestead,  but  both  the  acts  of  1845 
and  1853  were  repealed  by  the  act  of  February  13,  1854.^  By 
the  act  of  1854  a  homestead  of  not  exceeding  160  acres  was 
granted  to  persons  who  had  settled  upon  and  cultivated  for 
three  years  a  portion  of  the  vacant  public  domain.  This  act 
was  repealed  by  the  act  of  August  26,  1856,  and  this  repeal 
ended  the  homestead  policy  until  1866.^ 

By  the  act  of  August  30,  1856,  one  hundred  thousand  acres 
of  land  were  granted  to  each  of  the  asylums  for  the  insane,  the 
deaf  and  dumb,  the  blind  and  the  orphaned,  and  an  additional 
grant  of  land  was  made  to  the  school  and  university  funds,  but 
only  the  university  land  was  authorized  to  be  sold.^ 

The  fees  chargeable  by  the  secretary  of  state,  the  commis- 
sioner of  the  general  land  office,  the  comptroller,  treasurer,  and 
attorney  general  were  prescribed  in  1848.*  Apparently  the 
receipts  from  fees  were  insignificant.  Their  amounts  cannot 
be  ascertained  from  the  reports  after  1853,  but  are  included 
under  miscellaneous  revenue. 


^Laws  of  1853.  p.   33.     Laws  of  1854,  p.  106. 
^Laws  of  1856,  Adj.  Sess.,  p.  56. 
•Laws  of  1856,  Adj.  Sess.,  pp.  76,  71. 
*Law  of  1848,  p.  184. 


I 


Chapter  5. 
the  public  debt. 

The  controversy  over  the  settlement  of  the  debt  of  the 
Republic  of  Texas  which  was  inherited  by  the  State  of  Texas 
is  one  of  the  most  spectacular  features  in  the  whole  financial 
history  of  Texas.  The  attempt  was  made  to  have  the  United 
States  assume  this  debt  as  one  of  the  conditions  of  the  annex- 
ation of  Texas/  But  the  joint  resolution  of  the  United  States 
Congress  under  which  annexation  took  place  provided  that 
Texas  should  retain  her  public  domain  to  be  applied  to  the 
payment  of  the  debt  of  the  republic.  In  this  resolution  the 
United  States  specifically  disclaimed  any  responsibility  for  the 
debt.2 

An  estimate  of  the  debt  of  the  Republic  of  Texas  at  the 
beginning  of  statehood  was  $9,949,007.^  Until  1852  the  settle- 
ment of  the  debt  was  the  paramount  legislative  question,  but 
thereafter  it  shared  with  internal  improvements  the  public  and 
legislative  interest. 

As  contemplated  in  the  annexation  resolution  the  public 
domain  was  looked  to  as  the  source  of  payment;  but  how  it 
could  be  made  available  was  the  pressing  problem.  The  plan 
presented  by  the  first  two  gavernors,  Henderson  and  Wood, 
and  lengthily  considered  by  the  legislature,  was  to  sell  the 
unappropriated  lands  to  the  United  States.^  What  the  advan- 
tages of  this  arrangement  would  be  to  Texas  were  obvious. 


^Texas  Diplomatic  Correspondence,  vol.  2,  pp.  278,  328. 

*House  Misc.  Doc.  No.  17,  33rd  Cong.,  2nd  Sess.,  p.  28. 

'Statement  of  the  comptroller,  March  20,  1846;  House  Journal,  1st 
Leg.,  p.  317.  A  statement  by  the  comptroller  on  December  3,  1847, 
estimated  the  amount  at  $10,050,201;    House  Journal,  2nd  Leg.,  p.  55. 

^Message  of  Governor  Henderson,  February  24,  1846;  Senate  Journal, 
1st  Leg.,  appendix,  p.  8.  Report  of  Senate  Committee  on  the  Sale  of 
the  Public  Domain;  Senate  Journal,  1st  Leg.,  p.  114.  Report  of  the 
House  Committee  on  the  Sale  of  the  Public  Domain;  House  Journal, 
1st  Leg.,  p.  302.  Message  of  Governor  Wood,  December  29,  1847;  House 
Journal,  2nd  Leg.,  p.  167.  Also  message  of  November  6,  1849;  House 
Journal,  3rd  Leg.,  p.  17. 


118  Bulletin  of  tlie  University  of  Texas 

It  would  avoid  the  cost  in  time  and  money  of  the  survey  of 
the  lands  and  would  provide  immediately  proceeds  which  other- 
wise would  be  slowly  forthcoming  from  the  sale  of  the  lands. 
The  reasons  presented  for  the  United  States  acquiring  them 
were  that  they  could  be  profitably  sold,  that  they  would  enable 
the  United  States  to  acquire  control  over  the  Indian  tribes, 
and  that  acquisition  was  necessary  in  order  for  the  United 
States  to  fulfill  ''its  high  mission  to  the  human  race,  by  pre- 
venting savage  war  and  bloodshed,  by  subduing  and  fertilizing 
the  wilderness,  by  anticipating  ages,  and  extending  the  empire 
of  American  civilization  and  laws."^  The  alternative  to  this 
plan  of  sale  was  that  payment  of  the  debt  should  be  made  in 
land.^  A  third  plan  was  that  of  refunding  the  debt  in  state 
bonds.^ 

The  First  Legislature  came  to  no  conclusion  as  to  which  plan 
should  be  adopted,  and  the  net  result  of  its  deliberations  was 
that  the  debt  should  first  be  ascertained  and  classified/  Ac- 
cordingly the  Second  Legislature  passed  the  act  of  March  20, 
1848,  which  provided  that  the  auditor  and  comptroller  of  the 
state  should  ascertain  the  debt,  reducing  it  to  the  "actual  par 
value  which  may  have  been  realized  by  the  Republic."'^  The 
report  of  these  officials  was  submitted  on  January  1,  1850.^ 
It  gave  as  the  amount  of  debt  filed  for  auditing,  $7,213,477.43 ; 
as  the  estimated  amount  not  filed,  $3,842,217.28.  The  total  of 
these  was  $11,055,694.70.  This  total  scaled  according  to  the 
principle  of  value  received  at  the  time  of  issue  amounted  to 
$5,600,696."^ 

That  the  debt  should  be  scaled  was  an  accepted  idea  from 
the  beginning  of  the  discussion  over  payment.     Sam  Houston 


^Report  of  House  Committee;   House  Journal,  1st  Leg.,  p.  302. 

-Report  of  House  Committee;  House  Journal,  1st  Leg.,  p.  304.  Mes- 
sage of  Governor  Wood,  November  6,  1849;  House  Journal,  3rd  Leg., 
p.  18. 

^Report  of  the  Comptroller,  December  3,  1847;  House  Journal,  2nd 
Leg.,  p.  53. 

^Report  of  Senate  Committee,  April  19,  1846;  Senate  Journal,  1st 
Leg.,  p.  219. 

"Laws  of  1848,  p.   208. 

"House  Journal,  3rd  Leg.,  pp.  210-223. 

"For  statement  of   items  and  ratings  see  supra,  p.   126. 


A  Financial  History  of  Texas  119 

Avrote  in  1844:  ''The  assumption  of  our  debts  by  the  "United 
States  is  a  very  trifling  item,  and  as  the  liabilities  were  mostly 
incurred  on  the  principle,  of  equivalents,  the  whole  debt  will 
not  amount  to  five  millions.  All  our  10%  bonds,  as  well  as  I 
am  advised,  were  issued  6  for  1.  I  think  the  principle  of 
equivalents  was  established  in  the  early  part  of  1839,  and  the 
depreciation  was  pretty  rapid  until  the  close  of  Lamar 's  adminis- 
tration, when  Red  Backs  were  issued  at  8  for  1.  Thus  you  will 
perceive  that  the  United  States  will  not  in  equity  be  bound  ta 
redeem  the  liabilities  of  Texas  at  a  higher  rate  than  what  they 
were  issued. '  '^  Governor  Wood  declared  in  1849  that  '  neither 
good  faith  nor  the  most  fastidious  conception  of  morality*' 
required  the  state  to  pay  more  than  the  equivalent  value  that 
the  republic  received.-  To  the  advocates  of  scaling,  the  all- 
sufficient  reasons  for  it  were  that  the  liabilities  had  been  issued 
at  varying  rates  of  discount  and  were  largely  held  outside  the 
state  and  by  others  than  the  original  owners.^ 

The  advocates  of  paying  the  debt  at  its  face  value  were  few ;-. 
they  had  no  place  on  the  legislative  committee  considering  the 
debt, — at  least  they  left  no  evidence  of  their  membership  by 
minority  reports  or  protests ;  and  their  motives  were  impugned 
as  having  origin  "if  not  in  individual  gain,  at  least  in  a  desire- 
for  moral  fame  which  leaps  over  the  boundaries  prescribed  by 
the  ethics  of  this  utilitarian  age. '  '* 

AVith  the  ascertainment  and  scaling  of  the  debt  accomplished, 


'Houston  to  Van  Zandt  and  Henderson,  May  10, 1848;  Texas  Diplomatic 
Correspondence,  vol.  2,  p.  278.     See  also  ibid.,  p.  328. 

-House  Journal,  3rd  Leg.,  p.  343. 

^Report  of  Committee  on  Sale  of  Public  Domain;  Senate  Journal, 
1st  Leg.,  p.  114.  Report  of  Committee  on  Public  Lands;  ibid.,  p.  219. 
Report  of  Committee  on  Sale  of  Public  Domain;  House  Journal,  1st 
Leg.,  p.  307.  Report  of  Special  Committee  on  the  Debt;  House  Journal^ 
2nd  Leg.,  p.  408.  Message  of  Governor  Wood,  1847;  House  Journal, 
2nd  Leg.,  p.  147.  Message  of  Governor  Bell,  1849;  House  Journal,  3rd 
Leg.,  p.  343.  Report  of  the  Auditor  and  Comptroller,  December  27, 
1849.  See  also  Gouge,  op.  cit.,  pp.  146,  153,  and  the  Texas  State  Ga- 
zette, May  31,  June  28,  August  2,  September  20,  October  4,  and  No- 
vember 15,   1851. 

^Message  of  Governor  Bell,  December  26,  1849;  House  Journal,  3rd 
Leg.,  p.  343.  The  Galveston  Weekly  News  favored  payment  at  full, 
value.     See  issues  of  May  6  and  July  15,  1851. 


120  Bulletin  of  tlie  University  of  Texas 

provision  was  made  by  the  act  of  February  11,  1850,  for  pay- 
ment in  land  at  the  rate  of  fifty  cents  an  acre.^  It  was  prodded 
also  that  interest  should  cease  on  all  liabilities  after  July  1, 
1850,  the  purpose  of  this  provision  being  to  force  creditors  to 
accept  payment  in  land  immediately. 

The  scheme  of  scaling,  or,  as  it  was  more  euphemistically 
called,  classification  of  the  debt,  which  was  adopted  by  Texas, 
and  the  plan  for  payment  in  land  were  not  acceptable  to  the 
creditors.  They  could  not  be  blamed  for  refusing  to  accept 
land,  because  the  land  was  in  a  wilderness,  was  too  abundant 
to  have  any  value  until  after  a  long  lapse  of  time,  and  until 
disposed  of  it  would  be  subject  to  taxation  and  to  all  the  risks 
of  loss  which  non-residents  ran.- 

The  inability  of  the  state  to  make  payment  except  with  land 
and  the  unwillingness  of  the  creditors  to  accept  this  medium 
resulted  in  a  deadlock.  The  way  out  was  fortunately  provided 
as  the  result  of  a  dispute  between,  Texas  and  the  United  States 
over  the  state 's  northwestern  boundary.  The  military  occupancy 
of  the  territory  now  comprehended  in  New  Mexico  was  resented 
by  Texas,  and  a  special  session  of  the  legislature  was  called  in 
August,  1850,  to  protect  the  claims  of  the  state  against  the 
United  States.^  The  use  of  armed  force  against  the  ITnited 
States  was  urged,  if  it  should  be  necessary  to  enforce  the  claims 
of  Texas. 

Three  measures  were  introduced  in  the  Senate  of  the  United 
States  looking  to  the  settlement  of  this  dispute.  The  first  was 
called  the  ''Texas  Reduction  Limits  Bill",  and  was  introduced 
by  Senator  Benton,  of  Missouri,  January  16,  1850.  It  provided 
that  in  consideration  for  the  cession  by  Texas  of  the  northwest 
territory  in  dispute,  and  the  relinquishment  by  Texas  of  all 
claims  against  the  United  States  for  the  debts  of  the  Republic 


^Laws  of  1850,  p.  198.  Message  of  Governor  Wood,  November  6, 
1849;  House  Journal,  3rd  Leg.,  p.  18.  Message  of  Governor  Bell, 
December  26,  1849;  ibid.;  p.  343.     See  also  Gouge,  op.  cit.,  p.  161. 

-Gouge,  op.  cit.,  p.  169. 

•^Message  of  .Governor  Bell,  August  13,  1850;  House  Journal,  3rd 
Leg.,  Second  Sess.,  p.  11.  See  also  message  of  Governor  Wood,  March 
2,  1848;  House  Journal,  2nd  Leg.,  p.  901.  Messages  of  Governor  Bell, 
1849;  House  Journal,  3rd  Leg.,  pp.  343,  365.  Congressional  Globe,  vol. 
21,  pt.  2,  pp.  1526-7. 


Jl  Financial  History  of  Texas  121 

of  Texas  and  in  consideration  for  the  customs  houses  and  other 
public  property  surrendered  by  the  state  at  annexation,  the 
United  States  would  pay  $15,000,000  in  five  per  cent  bonds. ^ 
This  contemplated  cession  of  new  territory  involved  the  bill  in 
the  slavery  controversy,  and  on  January  29,  1850,  Henry  Clay 
submitted  to  the  Senate  eight  resolutions  of  a  compromise  na- 
ture, one  of  which  provided  that  for  the  relinquishment  by  Texas 
of  all  claims  to  any  part  of  New^  IMexico  the  United  States  would 
pay  that  part  of  the  debt  of  the  Republic  of  Texas  which  was 
secured  by  import  duties,-  The  resolutions  were  referred  to  the 
Committee  of  Thirteen,  the  report  of  which  was  made  by  Mr. 
Clay  on  May  8,  1850.^  The  committee  reported  in  favor  of  a 
bond  payment  to  Texas,  the  bonds  to  be  applied  first  to  the 
extinction  of  any  debts  for  which  the  duties  on  imports  were 
pledged.^  The  "Omnibus  Bill,''  of  which  the  bill  containing- 
these  provisions  was  a  part,  broke  dow^n.  As  an  independent 
solution  of  the  Texas  question,  Senator  Pearce,  of  Maryland, 
introduced  the  "Texas  Boundary  Bill".  It  contained  the  usual 
provisions  as  to  cession  of  territory  and  relinquishment  of  claims 
against  the  United  States,  but  proposed  as  the  amount  of  in- 
demnity to  Texas  $10,000,000  in  five  per  cent  bonds,  and  in- 
corporated the  important  proviso  that  $5,000,000  should  not  be 
issued  "until  the  creditors  of  the  state  holding  bonds  of  Texas 
for  which  duties  on  imports  were  specially  pledged  shall  first  file 
at  the  treasury  of  the  United  States  releases  of  all  claims  against 
the  United  States  for  or  on  account  of  said  bonds.  "^  This  bill 
was  passed  by  the  Senate  on  August  9,  1850,  and  by  the  House 
on  September  6,  and  was  approved  on  September  9.*^ 

Texas  accepted  this  act  on  November  25,  1850.'  As  an  imme- 
diate result  of  it,  she  ceded  67,000,000  acres  of  public  land,  and 
came  into  possession  of  $5,000,000  in  United  States  bonds.  Pro- 
vision for  payment  of  the  debt  was  deferred,  however,  because 
of  the  large  amount  of  unascertained  claims  and  of  the  need  of 


'Cong.  Globe,  vol.  21,  pt.  1,  p.  166. 

=Ibid.,  p.  245. 

^Ibid.,  p.  945. 

*Ibid.,  p.  947. 

^Ibid.,vol.  21,  pt.  2,  p.  1520. 

^bid.,  pp.  1555,  1764. 

^Laws   of   1850.    Second   Session,   p.    4. 


i 


122  Bulletin  of  tJie  University  of  Texas 

construction  of  the  proviso  relating  to  the  five  millions  reserved 
in  the  United  States  Treasury.  The  contentions  of  Texas  were 
that  she  alone  was  qualified  to  define  what  constituted  the  revenue 
debt,  that  paj^ment  should  be  made  on  the  basis  of  her  rating 
of  the  debt,  and  that  as  soon  as  an  appropriation  was  made  by 
her  for  any  part  of  this  debt  and  releases  for  it  were  filed  with 
the  United  States  Treasury,  an  equal  amount  of  the  reserved 
five  millions  should  be  turned  over  to  her  as  a  refund.^  As  to 
the  first  and  third  contentions,  Texas  was  at  a  disadvantage 
because  the  Boundary  Act  left  their  settlement  to  the  officials 
of  the  United  States.  The  Texas  officials  wanted  to  restrict  the 
revenue  debt  to  those  securities  only  upon  whose  face  redemption 
was  stated  to  be  secured  by  duties  on  imports.^  The  Secretary 
of  the  Treasury,  Mr.  Corwin,  ruled,  however,  that  the  section 
in  the  act  of  the  Kepublic  of  Texas  of  January  14,  1840,  which 
pledged  the  revenues  for  the  redemption  of  all  loans  negotiated 
by  the  authority  of  the  republic  comprehended  all  loans  negoti- 
ated prior  to  that  act,  and  that  all  public  loans  and  all  the  liabili- 
ties receivable  for  public  dues  were  therefore  debts  for  which 
duties  on  imports  were  specifically  pledged.  The  ruling  was 
approved  by  President  Fillmore,  September  13,  1851.^  The 
effect  of  this  rule  was  to  include  all  bonds,  except  the  8%  and 
10%  funding  bonds  of  the  act  of  February  5,  1840.  But  this 
interpretation  of  the  revenue  debt  was  modified  in  1853  by  Mr. 
Gushing,  the  Attorney  General  of  the  United  States.  He  con- 
strued the  act  of  the  Republic  of  Texas  of  January  14,  1840,  to 
apply  not  only  to  past  debts  but  also  to  future  loans,  and  he  held 
further  that  the  phrase  "bonds  or  certificates  of  stocks"  in  the 
proviso  of  the  Boundary  Act  should  be  construed  in  their  ac- 
cepted financial  sense.*  The  effect  of  Mr.  Gushing 's  construction 
was  to  include  under  the  revenue  debt  the  8%  and  10%  bonds 
of  the  act  of  February  5,  1840,  and  to  exclude  the  treasury 


^Message  of  Governor  Bell,  November  10,  1851.  Speech  of  Mr.  Bell; 
Cong.   Globe,   vol.   28.  pt.   3,    p.    595. 

'Report  of  the  Joint  Select  Committee  of  the  Senate  and  House; 
Senate  Journal,  3rd  Leg.,  Third  Sess.,  p.   39. 

-House  Misc.  Doc.  No.  17,  33d  Cong.,  2nd  Sess.,  pp.  4-9.  The  Texas 
State  Gazette,  October  4,  1851. 

*House  Misc.  Doc.  No.  17,  33d  Cong.,  2nd  Sess.,  pp.  12-23. 


A  Financial  History  of  Texas  123 

notes.^  The  interpretation  by  the  United  States  authorities  of 
what  should  be  included  under  the  revenue  debt  was  thus  con- 
trary to  the  wishes  of  Texas.  The  ruling  of  Secretary  Corwin 
that  none  of  the  reserved  bonds  w^ould  be  turned  over  to  Texas 
until  releases  for  all  the  revenue  debt  were  filed  was  also  adverse 
to  the  contention  of  Texas. 

The  interpretation  by  the  officials  of  the  United  States  of  the 
proviso  in  the  Boundary  Act  and  the  report  of  the  auditor  and 
the  comptroller  of  the  debts  as  ascertained  to  November  12,  1851, 
were  followed  by  the  long  delayed  act  for  the  payment  of  the 
debt  of  the  republic.  This  was  the  act  of  January  31,  1852.- 
It  accepted  the  rating  of  the  debt  as  given  in  the  auditorial 
report  of  1851  and  appropriated  $2,000,000  of  the  United  States 
bonds  as  a  means  of  payment.  It  provided  that  the  non-revenue 
debt  should  be  paid  unconditionally,  but  that  no  payment  should 
be  made  on  the  revenue  debt  until  the  governor  was  notified  by 
the  President  that  there  would  be  issued  an  amount  of  the  re- 
served five  million  of  bonds  equal  to  the  amount  of  releases  filed 
by  the  creditors  with  the  United  States  Treasury.  The  debt  for 
which  unconditional  payment  was  provided  consisted  of  audited 
paper,  audited  claims,  miscellaneous  liabilities,  and  the  8%  and 
10%  bonds  issued  under  the  act  of  February  5,  1840.  The  par 
value  of  these  debts,  not  including  interest,  was  $1,678,242,  but 
scaled,  the  amount  was  $1,058,779. 

Another  deadlock  between  the  state  and  the  creditors  took 
place.  The  condition  attached  by  Texas  to  the  payment  of  the 
revenue  debt  flew  in  the  face  of  the  ruling  of  Secretary  Corwin. 
This  ruling  would  in  its  operation  work  a  hardship  upon  the 
state,  for  it  would  prevent  reimbursement  for  payments  on  the 
revenue  debt  until  all  this  class  of  creditors  filed  their  releases 
with  the  United  States.  Unless  a  reasonable  length  of  time  were 
prescribed  within  which  filing  should  take  place,  the  state  could 
be  held  up  by  tardy  creditors  and  the  state  treasury  would  be 
deprived  of  the  funds  expended  for  an  unnecessarily  long  time.^ 
At  the  same  time  this  ruling  protected  the  United  States,  and  it 


'Report  of  the  Comptroller,  1852-3,  p.  7. 
=Laws  of  1852,  p.  38. 

'Speech  of  Mr.  Bell,  Cong.  Globe,  vol.  28,  pt.  3,  p.  595.     Message  of 
Gorernor  Pease,  December  23,  1853. 


124  BuUetin  of  the  liniversity  of  Texas 

was  very  much  to  the  interest  of  the  creditors.  The  other  cause 
of  the  deadlock  was  the  refusal  of  the  creditors  to  accept  the 
scaled  rates  adopted  by  Texas. 

Memorials  of  creditors,  some  praying  for  a  modification  of  the 
secretary's  ruling  in  order  that  payment  might  be  begun  by 
Texas  at  the  scaled  rates;  others  proposing  the  responsibility  of 
,the  United  States  for  the  full  payment  of  the  revenue  debt, 
brought  the  matter  into  Congress.^  In  the  Senate  on  x\ugust 
26,  1852,  there  failed  a  proposed  amendment  to  a  foreign  rela- 
tions bill  which  would  have  permitted  the  issue  of  bonds  to  Texas 
as  fast  as  releases  were  filed.-  It  was  developed  in  the  debate 
upon  this  amendment  that  creditors  whose  claims  had  been  scaled 
but  little  would  accept  payment  and  that  those  whose  claims 
were  heavily  scaled  would  not;  be  satisfied  and  would  continue 
to  demand  relief  from  Congress."'  The  creditors  contended  that 
the  responsibility  of  the  United  States  arose  when  Texas  lost 
through  annexation  the  right  to  impose  the  customs  duties  which 
were  pledged  for  the  payment  of  the  public  loans,  arid  they 
contended  further  that  this  responsibility  was  virtually  admitted 
by  the  ''Boundary  Act"  in  the  proviso  reserving  the  $5,000,000 
of  bonds.*  The  contention  of  the  creditors  was  accepted  in  the 
two  reports  of  the  Senate  Finance  Committee  to  which  the  mem- 
orials were  referred,  and  was  the  basis  of  the  later  action  of 
Congress.^  With  its  report  on  August  17,  1852,  the  Senate 
Finance  Committee  submitted  a  bill  to  appropriate  in  lieu  of 
the  $5,000,000  of  reserved  bonds,  $8,555,000  in  5%  bonds,  to  l)e 
divided  equally  among  the  holders  of  the  revenue  debt."  The 
Thirty-Second  Congress  expired  without  any  action  being  taken. 

The  question  was  reopened  in  the  first  session  of  the  Thirty- 
Third  Congress  by  the  introduction  on  December  12,  1853,  of  a 


^Cong.  Globe,  vol.   24  pt.   3,  pp.  2231,  2380;    vol.  28,  passim. 

''Ibid.,  vol.  24,  pt.  3,  p.  2380. 

^Ibid.,p.  2381. 

*Gouge,  op.  cit.,  pp.   312-316. 

'Report  of  August  17,  1852,  in  Gouge,  op.  cit.,  pp.  312-316.  Report  of 
July  1,  1854;   House  Misc.  Doc.  No.  17,  33d  Cong.,  2nd  Sess.,  pp.  23-2S. 

"Mr.  Pearce,  of  Maryland,  chairman  of  the  committee,  stated  in  his 
speech  of  August  26,  1852,  that  the  committee  proposed  to  appropriate 
$8,333,000  in  3  per  cent  bonds.  See  also  message  of  Governor  Bell, 
January  13,  1853;  Senate  Journal,  4th  Leg.,  Second  Sess.,  p.  20, 


A  Finaticial  History  of  Texas  125 

bill  by  Senator  Thompson,  of  Kentucky,  which  proposed  the  dis- 
tribution of  $8,333,000  in  37r  bonds  among  the  revenue  debt 
creditors.^  The  Senate  Finance  Committee,  to  which  it  was  re- 
ferred, reported  it  on  June  15,  1854,  with  a  substitute  which  pro- 
posed a  pro  rata  distribution  of  $6,500,000  in  cash.^  This  sub- 
stitute did  not  meet  the  approval  of  the  chairman  and  of  other 
members  of  the  committee  and  it  was  recommitted  to  the  com- 
mittee on  June  21.  The  committee  again  reported  on  July  1, 
1854,  but  this  time  in  favor  of  a  distribution  of  $8,500,000  in 
cash.^  This  amount  was  equal  to  the  face  value  of  $5,000,000  of 
reserved  bonds  with  interest  to  maturity.^  An  amendment  by 
]\Ir.  Bright,  of  Indiana,  that  the  interest  on  the  debt  should  be 
regulated  by  the  existing  laws  of  Texas  was  agreed  to,  but  an 
amendment  by  Mr.  Chase,  of  Ohio,  to  reduce  the  amount  to  $6,- 
500,000  was  defeated.^  The  amount  proposed  by  Mr.  Chase  and 
later  by  the  House  was  the  reserved  $5,000,000  with  premium 
and  with  interest  to  date.^  The  bill  with  the  Bright  Amendment 
passed  the  Senate  July  21,  1854,  by  a  vote  of  27  to  19.^  The 
first  session  ended,  however,  without  any  action  being  taken  by 
the  House.  At  the  second  session  the  House  made  seven  amend- 
ments. They  were,  principally,  that  the  sum  to  be  appropriated 
should  be  reduced  to  $6,550,000,  and  that  the  act  should  not 
become  effective  until  assented  to  by  the  legislature  of  Texas  nor 
until  the  legislature  should  withdraw  and  abandon  all  claims 
and  demands  against  the  United  States  on  account  of  Indian 
depredations,  prior  to  the  admission  of  the  state  into  the  Union.* 
The  bill  as  amended  passed  the  House  February  7,  1855,  by  a 
vote  of  153  to  43.^  The  Senate  disagreed  to  the  amendments  and 
the  bill  went  to  conference. ^^  In  the  conference  the  Senate  with- 
drew from  its  disagreements  to  the  House  amendments,  and  the 


^Cong.  Globe,  vol.  28,  pt.  1,  p.  28,  and  pt.  3,  p.  1806. 
'Cong.  Globe,  vol.  28,  pt.  3,  p.  1806. 
'Ibid.,  p.  1806. 

*Cong.  Globe,    vol.   28,   pt.    3,  p.   1845. 
"Cong.  Globe,  vol.  28,  pt.  3,  p.  1845. 
'Ibid.,  p.  1844. 
^Ibid.,  p.  1845. 

*Cong.  Globe,  vol.  30,  pt.  1,  pp.  618,  619. 
"Ibid.,  p.   619. 
^"Ibid.,  pp.  719,  743. 


126  Bulletin  of  tlie  University  of  Texas 

amount  to  be  appropriated  was  agreed  upon  at  $7,750,000.^  The 
conference  bill  was  accepted  by  the  House  by  a  vote  of  123  to  77 
and  by  the  Senate  by  a  vote  of  30  to  14.  The  bill  was  approved 
February   28,   1855.- 

The  $7,750,000  was  to  be  pro-rated  among  the  holders  of  the 
debt  reported  to  be  within  the  provisions  of  the  act  of  September 
9,  1850,  by  Secretary  Corwin  and  Attorney  General  Gushing. 
Thus  the  difference  of  opinion  between  these  officials  was  done 
away  with.  The  items  and  the  par  and  scaled  amounts  of  the 
revenue  debt  with  interest  to  July  1,  1850,  were  as  follows:^ 

Texas  rating 

on  the  Scaled 

Description  of  debt.  Par  amount.       dollar.  amount. 

Ten  per  cent  funding  bonds, 

act  of  June  7,  1837 $1,657,803.33  .70  $1,160,462.33 

Ditto,  issued  to  Swartwout  29,291.47         1.00  29,291.47 

Ten  per  cent  bonds  author- 
ized by  the  five  million 

Dawson  debt 1,211,000.00  .50  605,500.00 

Holford  debt 411,404.70  .50  205,702.35 

Pennsylvania    Bank    of 

the  United  States 960,498.00  .8745  839,955.50 

Ten  per  cent  funding  bonds, 

act  of  February  5,  1840      1,627,784.16  .30  488,335.24 

Eight   per  cent  funding 

bonds,  act  of  February  5, 

1840    46,596.26  .30  13,978.87 

Eight     per     cent     treasury 

bonds,  act  of  February  5, 

1840    1,417,680.00  .20  283,536.00 

Ten  per  cent  treasury  notes, 

first  issue 65,208.33        1.00  65,208.33 

Ditto,  second  issue 451,708.32  .50  225,854.16 

Non-interest  treasury  notes      2,199,728.64  .25  549,932.16 


Total $  10,078,703.21  $     4,467,756.41 

The  question  of  acceptance  or  rejection  of  the  proposal  of 
debt  payment  contained  in  this  act  was  submitted  to  the  voters 
of  Texas  in  the  general  election  of  1854.  There  were  11,609 
votes  in  favor  of  acceptance  and  13,818  against.  Though  the 
question  was  one  of  great  importance  to  the  state,  only  25.427 


^Ibid.,  pp.  853,  863. 

^Ibid.,  p.  990.     For  act  see  U.  S.  Statutes  at  Large,  X,  ch.  129. 

^Report  of  the  Comptroller,  1854-5. 


A  Financial  History  of  Texas  127 

out  of  over  45,000  who  voted  in  the  election  expressed  themselves 
as  to  the  proposition  submitted.^ 

According  to  the  provisions  of  the  act  acceptance  or  rejection 
was  lodged  with  the,  legislature,  and  though  the  vote  of  the 
people  was  adverse  to  acceptance,  the  legislature  gave  the  ques- 
tion independent  consideration.  Within  the  legislature  the  con- 
test was  stubborn  as  to  the  decision  which  should  be  made. 
The  arguments  advanced  in  favor  of  acceptance  were  chiefly^ 
first,  that  no  reasonable  hope  could  be  entertained  that  the  debt 
would  ever  be  settled  under  the  terms  of  the  Boundary  Act  or 
of  the  act  of  Texas  of  January  31,  1852,  because  Texas  would  not 
accept  the  national  government's  construction  of  the  Boundary 
Act  and  the  creditors  would  not  accept  the  scaled  rates  adopted 
in  the  Texas  act;  second,  that  Texas  alone  could  not  prescribe 
the  terms  on  which  the  debt  should  be  settled,  because  in  con- 
senting to  the  Boundary  Act  she  thereby  admitted  the  participa- 
tion of  the  United  States;  and,  third,  that  it  was  important 
that  the  "troublesome  business  should  be  settled  upon  terms 
satisfactory  to  the  creditors.  "- 

The  arguments  against  acceptance  were,  first,  that  Texas 
had  the  right  to  transact  her  financial  affairs  in  her  own  way; 
second,  that  acceptance  would  be  in  the  interest  of  the  "greedy 
foreign  speculator";  and,  third,  that  there  would  be  a  financial 
loss  to  the  state  to  accept  this  act  in  lieu  of  the  Boundary  Act.* 
The  minority  report  of  the  house  committee  on  public  debt  fig- 
ured a  total  loss  to  the  state  by  acceptance  of  $6,082,244.  This 
sum  was  arrived  at  by  adding  to  the  $5,000,000  in  bonds  re- 
served in  the  United  States  Treasury  the  accumulated  interest 
to  January  1,  1855,  of  $1,250,000;  premiums  of  $500,000  on  the 
bonds;  and  Indian  claims  of  $3,800,000;  and  subtracting  from 


^Message  of  Governor  Pease,  November  5,  1855. 

^Message  of  Governor  Pease,  November  5,  1855.  Majority  Report  of 
House  Committee  on  Public  Debt,  December  1,  1855;  House  Journal, 
6th  Leg.,  p.  141.  Galveston  Weekly  News,  May  12,  1855,  and  January 
15,  1856. 

^Minority  Report  of  the  House  Committee  on  Public  Debt,  December 
1,  1855;  House  Journal,  6th  Leg.,  p.  151.  The  Texas  State  Gazette, 
May  19,  June  30,  and  November  10,  1855.  See  also  the  Galveston 
Weekly  News,  December  18,  1855,  and  June  8,  1856. 


128  Bulletin  of  tlie  University  of  Texas 

the  total  of  $11,550,000  the  amount  of  the  revenue  debt  s*3aled 
which  according:  to  their  statement  was  $4,467,756.  This  finan- 
cial loss  to  the  state  was  the  principal  basis  of  the  opposition. 
The  bill  passed  and  became  the  act  of  February  1,  1856. ^  The 
bill  passed  the  house  by  the  very  close  vote  of  42  to  38. 

It  was  charged  both  in  Congress  and  in  the  legislature  of  Texas 
that  some  members  of  each  body  had  a  financial  interest  in 
the  passage  of  the  bill.  When  the  vote  on  the  House  bill  was 
about  to  be  taken  in  Congress,  the  rule  of  the  House  in  regard 
to  members  voting  upon  a  question  in  which  they  had  a  direct 
interest  was  ordered  read.^  In  the  legislature  a  committee  was 
appointed  to  investigate  the  charges  of  improper  conduct  on 
the  part  of  members  of  the  legislature,  but  the  report  was  that 
no  facts  brought  before  it  justified  the  charge  that  bribery  was 
employed.  An  attempt  was  thereupon  made  to  have  the  com- 
mittee itself  investigated,  but  it  failed.^ 

The  $7,750,000  prorated  among  the  holders  of  the  $10,078,703 
revenue  debt  gave  each  creditor  about  seventy-six  and  nine-tenths 
cents  on  the  dollar.  This  settlement  was  very  acceptable  to  the 
majoritj'  of  the  creditors.  Settlement  on  the  basis  of  the  Texas 
ratings,  which  varied  from  twenty  cents  on  the  dollar  to  par, 
would  have  been  a  severe  blow  to  those  who  had  purchased  the 
securities  as  a  speculation.  The  securities  were  held  mainly  out- 
side the  state — in  Delaware.  Kentucky,  Pennsylvania,  and  South 
Carolina.*  In  1850  in  Philadelphia  ten  per  cent  interest  notes 
were  quoted  at  forty  cents  on  the  dollar  and  non-interest  notes 
at  from  twenty-four  and  one-quarter  cents  to  twenty-four  and 
three-quarter  cents.  Eight  per  cent  treasury  bonds  were  quoted 
at  thirty-five  cents  on  the  dollar,  and  a  block  of  45,000  of  the 
bonds  changed  hands  at  that  price.'' 

In  the  adjustment  proposed  by  Texas  in  the  act  of  1852  there 
were  three  items  of  debt  which  were  rated  higher  by  $123,217.56 


^Laws  of  1856,  p.  47. 

'Congressional  Globe,  vol.  30,  pt.  1,  p.  618.  See  also  the  speech  of 
Mr.   Giddings,  of  Ohio;    ibid.,   p.   598. 

^House  Journal,  6th  Leg.,  Adj.  Sess.,  pp.  314,  506-522,  554.  Galveston 
Weekly  News,  August  12,  1856. 

'House  Misc.  Doc.  No.  17,  33d  Cong.,  2nd  Sess. 

■'The    Texas    State    Gazette,    April    13,    1850. 


A  Firm^icial  History  of  Texas  129 

than  they  were  settled  for  by  the  United  States  under  the  act 
of  1855.  When  the  question  of  settlement  was  under  considera- 
tion in  Congress  this  difference  was  noted  as  an  objection  to  the 
passage  of  the  act  of  1855,  and  to  obviate  it  a  provision  was 
incorporated  in  the  bill  which  authorized  the  Secretary  of  the 
Treasury  to  repay  to  Texas  on  the  pro-rata  basis  out  of  the  fund 
of  $7,750,000,  the  amount  of  the  revenue  debt  which  had  been 
paid  by  the  state.  It  was  thought  that  the  repayment  would 
enable  the  state  to  pay  to  the  creditors  the  $123,217.56  which 
they  would  lose  by  acceptance  of  the  act  of  1855.^  The  state 
received  in  1856-7  from  the  United  States  $300,450.01  which  was 
the  amount  that  creditors  had  received  from  the  state  in  pay- 
ment of  $997,042.90  of  revenue  debt,  that  amount  being  at  the 
rate  of  thirty  cents  on  the  dollar.-  These  creditors  received 
from  the  United  States  out  of  the  fund  of  $7,750,000  the  amount 
necessary  to  bring  the  settlement  to  the  basis  of  seventy-six  and 
nine-tenths  cents  on  the  dollar.  But  those  creditors  who  had 
lost  $124,217.56  by  the  acceptance  of  the  act  of  1855  were  never 
reimbursed  by  Texas.  Certain  holders  of  the  non-revenue  debt, 
however,  were  compensated  by  the  state  for  the  difference  be- 
tween the  scaled  and  par  amounts  of  their  debts.^  The  amount 
paid  to  them  w^as  $57,768.82.* 

The  refusal  of  Texas  to  fulfill  to  the  creditors  who  lost  the 
$123,217  which  she  had  previously  acknowledged  was  due  them 
is  an  illustration  of  the  hostile  attitude  of  the  state  towards  the 
holders  of  the  revenue  debt.  The  reasons  for  scaling  were  that 
the,  bonds  and  notes  of  the  republic  were  issued  at  "an  ex- 
ceedingly dark  and  gloomy  period,"  and  so  suffered  a  heavy 
discount,  and  that  they  had  passed  out  of  the  hands  of  the 
original  holders  and  had  been  purchased  by  outsiders  as  a 
speculation.  These  are  the  usual  arguments  for  repudiation, 
and  their  adoption  means  the  destruction  of  public  credit.  It 
was  fortunate  for  Texas  that  after  her  struggle  to  effect  repudia- 
tion she  had  no  occasion  soon  to  go  into  the  general  loan  market. 


'Message   of   Governor   Pease,  November   2,   1857. 
^Report  of  the  Comptroller,   1856-7,  p.  78. 
^Laws  of  1856,   p.  64. 
''Report  of  the  Comptroller,  1856-7,  p.  26. 


)— H 


130  Bulletin  of  flie  Umversity  of  Texas 

The  failure  of  Congress  to  appropriate  an  amount  sufficient  to 
pay  in  full  the  principal  and  interest  of  the  revenue  debt  was 
an  act  of  repudiation  as  discreditable  as  that  which  Texas  w^ould 
have  committed,  because  the  passage  of  the  act  of  1855  w^as  a 
de  facto  acknowdedgment  of  the  responsibility  felt  for  this  debt. 
The  amount  appropriated  to  be  pro-rated  was  unconnected  with 
the  $5,000,000  of  United  States  bonds  reserved  in  the  United 
States  Treasury  under  the  act  of  1850  or  with  any  other  logical 
basis,  and  was  merel}^  the  result  of  politics.  The  $5,000,000  in 
bonds  reserved  in  1850  was  thought  at  the  time  to  be  sufficient 
to  pay  all  of  the  revenue  debt,  and  the  foundation  of  this  belief 
was  a  document  of  the  auditorial  board  w^hich  stated  that  the 
revenue  debt  amounted  to  $4,500^000.^  But  this  w^as  only  the 
amount  of  the  bonds  upon  wiiose  face  the  customs  duties  w^ere 
pledged  in  name.  Since  the  original  a<it  contemplated  an  amount 
w^hich  would  discharge  the  revenue  debt  at  par,  the  insufficient 
amount  of  the  act  of  1855  is  without  extenuation. 

The  stoppage  of  interest  after  July  1,  1850,  was  an  act  which 
had  the  marks  of  a  breach  of  faith.  It  was  an  attempt  to  compel 
the  creditors  to  take  in  payment  land  or  something  for  which 
they  had  not  contracted.  As  the  greater  part  of  the  debt  was 
not  paid  until  1856,  about  six  years'  interest  was  lost.  Besides 
the  scaling  and  the  stoppage  of  the  interest,  a  third  characteristic 
of  the  debt  treatment  was  the  barring  of  claims.  By  the  act  of 
March  20,  1848,  it  was  provided  that  all  claims  not  presented 
before  the  second  Monday  in  November,  1849,  should  be  post- 
poned.2  The  act  of  February  8,  1850,  extended  the  time  to  the 
first  Monday  in  September,  1851,  and  barred  all  claims  not  pre- 
«ented  by  that  time.  Later  acts,  however,  extended  the  time  to 
June  1,  1861.^  There  are  acceptable  administrative  reasons  for 
a  state  ascertaining  its  debt,  but  when  the  object  is  rather  to 
force  unwilling  creditors  to  submit  to  a  scaling  system  the 
threat  to  bar  claims  is  a  dishonorable  piece  of  legislation.* 

Congress  extended  the  time  for  presenting  the  revenue  debt 


.^Cong.  Globe,  vol.  28,  pt.  3,  p.  1846. 
^'Laws  of  1848,  p.  208. 

^Laws  of  1853,  Called   Sess.,   p.   54.     Laws  of   1854,   p.   79.     Laws   of 
1856,  p.  23.     Laws  of  1858,  p.  47.     Laws  of  1860,  p.  60. 
*Goiige,  op.  cit.,  p.  225. 


A  Financial  History  of  Texas  131 

to  January  1,  1861,  and  at  this  date  there  remained  a  balance 
of  $101,113.27.  In  1881,  $45,000  was  paid  out  of  this  balance 
and  the  remainder  was  turned  over  to  Texas. 

By  1861  Texas  had  paid  out  of  the  proceeds  of  the  $5,000,000 
of  five  per  cent  bonds  received  in  1850,  $1,558,055.31  for  the 
debt  of  the  republic.  But  as  $300,450.01  was  revenue  debt,  the 
United  States  refunded  that  amount  in  1856  and  1857.  leaving 
$1,257,605.30  as  the  net  amount  paid  by  Texas.  The  state 
furthermore  received  between  1846  and  1860  on  account  of  debts 
due  the  republic  $289,110.86  in  the  audited  paper  and  other 
liabilities  of  the  republic,  but  $847.70  of  this  was  refunded  by 
the  United  States  in  1857,  leaving  the  net  amount  of  the  debt 
discharged  in  this  way  at  $288,263.16.  The  amounts  of  pay- 
ments on  debt  and  of  liabilities  received  were  as  follows : 

Payments.  Liabilities. 

1847 $101,045.60 

1848 46,-548.15 

1849 34,961.24 

1850 32,220.15 

1851 7,750.74 

1852 $997,684.12  34,771.90 

1853 116,460.52  9,042.16' 

1854 179,015.81  1,122.49 

1855 44,412.36  1,047.47 

1856 113,865.60  89.01 

1857 8,946.44  324.90 

1858 72,879.73  

1859 12,852.53  20,187.05 

1860.  . 11,938.20  


Total $1,558,055.31  $289,110.86 

After  1860  the  amount   paid  was  $29,498.13,  distributed  as 
follows : 


1861 $8,520.00 

1862 1,783.80 

1863 20.83 

1873 503.00 

1881 3,000.00 

1883 610.50 

1885 60.00 

1902 15,000.00 


Total 29,498.13 


132  Bulletin  of  tlie  Umversity  of  Texas 

The  state  itself  incurred  no  bonded  debt  during  the  period 
1846-1860,  except  in  1850.  By  the  act  of  December  2,  1850, 
$36,000  of  five  per  cent  state  bonds  were  authorized  to  be  issued 
and  exchanged  for  an  equal  amount  of  specie  in  the  school  fund. 
The  money  obtained  in  this  manner  was  used  to  defray  current 
expenses,  and  the  transaction  was  merely  in  anticipation  of  the 
receipt  of  the  United  States  bonds  under  the  Boundary  Act. 
In  1851  United  States  bonds  were  exchanged  for  these  bonds, 
and  the  latter  were  canceled. 

The  experience  of  the  republic  with  debt  appears  to  have 
impressed  itself  upon  the  framers  of  the  first  constitution  of 
the  state.  It  was  proposed  in  the  constitutional  convention  of 
1845  that,  no  loan  should  ever  be  made  on  the  faith  of  the 
state,  and  though  this  radical  proposition  was  rejected,  the 
provision  adopted  was  so  restrictive  as  to  indicate  a  strong  anti- 
debt  sentiment.^  The  provision  was  that  ''the  aggregate  amount 
of  debt  hereafter  contracted  by  the  legislature  shall  never  ex- 
ceed the  sum  of  $100,000  except  in  case  of  war,  to  repel  in- 
vasion, or  suppress  insurrection.  And  in  no  case  shall  any 
amount  be  borrowed,  except  by  a  vote  of  two-thirds  of  both 
houses  of  the  legislature."- 

Owing  first  to  the  revenue  accruing  under  the  laws  of  the 
republic  and  later  to  the  receipt  of  the  $5,000,000  of  United 
States  bonds,  Texas  during  this  first  period  of  statehood  was 
virtually  free  of  any  bonded  debt,  and,  except  in  1860,  of  any 
floating  debt.  This  gave  her  a  unique  place  among  the  states. 
By  1860  the  United  States  bonds  had  been  expended,  and  be- 
cause of  increased  expenditures  and  insufficient  taxation  the 
general  revenue  account  had  warrants  outstanding  against  it 
which  it  could  not  pay,  and  the  state  was  indebted  to  the 
university  fund  for  the  $100,000  of  United  States  bonds  bor- 
rowed from  that  fund  in  order  to  pay  the  increasingly  heavy 
expenses  of  protecting  the  frontier. 


^Journal  of  the  Convention,  1845,  p.  185. 

'Art.  7,  sec.  33.     This  was  also  the  limit  imposed  by  the  Louisiana 
Constitution  of   1845. 


A  Financial  History  of  Texas  133 

SUMMARY. 

The  first  period  of  statehood  began  and  ended  with  thi)  gen- 
eral treasury  in  financial  difficulties,  and  but  for  the  opportune 
receipt  of  the  $5,000,000  of  United  States  bonds  and  the  as- 
sumption of  the  payment  of  the  revenue  debt  of  the  republic  by 
the  United  States  the  treasury  would  probably  have  been  in  dire 
straits  throughout  the  entire  period.  As  it  was,  however,  the  re- 
ceipt of  the  bonds  enabled  the  state  during  eight  years  out  of  the 
fourteen  of  the  period  to  pay  a  large  and  harassing  debt,  to  en- 
dow the  school  fund  generously,  to  construct  public  buildings,  to 
meet  the  ordinary  expenses  of  the  government,  to  aid  in  the  con- 
struction of  railroads,  and  to  administer  the  vast  public  domain 
not  with  a  view  to  revenue  but  so  as  to  encourage  the  growth  of 
population  and  the  material  development  of  the  state.  The 
indemnity  bonds  were  the  key  to  the  expenditure  and  revenue 
policies  of  the  period,  and  their  influence  was  felt  in  later  periods. 
Inasmuch  as  the  general  treasury  was  greatly  assisted  prior  to 
the  receipt  of  the  bonds  by  the  revenue  accruing  under  the  laws 
of  the  Republic  of  Texas,  the  state  government  was  supported 
throughout  the  first  period  of  statehood  not  from  taxation  but 
from  extraneous  sources, — from  windfalls.  The  result  was  that 
the  people  of  the  state  did  not  become  accustomed  to  taxation 
as  a  method  of  supporting  the  government,  and  a  habit  of  de- 
pending upon  other  sources  was  thereby  fostered.  The  begin- 
nings of  this  habit  had  really  been  made  during  the  period 
of  the  republic,  because  the  republic  lived  on  credit. 

The  purely  agricultural  character  of  the  population  and  the 
frontier  condition  existing  throughout  the  state  were  reflected 
not  only  in  the  general  attitude  towards  education  but  also  in 
the  expenditure,  revenue  and  debt  policies.  There  was  a  tend- 
ency to  confine  expenditures  to  the  support  of  the  narrow  pro- 
tective functions  of  government ;  poll  and  occupation  taxes  which 
would  fall  on  those  engaged  in  business  were  popular,  and  the 
scaling  of  the  debt  was  a  widely  approved  policy. 


PART  IV. 

THE  CIVIL  WAR,  1861-1865.1 

Chapter  1. 

expenditures. 

Texas  was  perhaps  the  most  fortunate  of  the  Confederate 
States  during  the  war.  Her  territory  was  not  a  battleground 
and  was  free  from  devastating  invasion.  That  part  of  her 
population  which  was  not  in  the  armies  was  free  therefore  to 
follow  agriculture  and  other  pursuits  unmolested.  Proximity 
to  Mexico  provided  a  comparatively  safe  outlet  to  a  market 
for  cotton  and  inlet  for  needed  supplies  of  various  kinds.  The 
possession,  too,  of  a  large  amount  of  disposable  assets  in  the 
form  of  United  States  bonds  obviated  the  need  of  an  early 
resort  to  high  taxation  or  an  extensive  use  of  the  state's  credit. 
Pull  advantage  of  these  favoring  circumstances  of  geography 
and  assets  could  not,  however,  be  taken.  Transportation  of 
products  to  the  Mexican  frontier  proved  to  be  slow,  expensive 
and  dangerous,  while  the  United  States  bonds  were  only  par- 
tially productive  and  served  but  to  stay  temporarily  the  evil 
day  of  financial  disorder.  In  the  end  the  financial  story  of 
Texas  was  the  same  for  this  period  as  that  of  the  other  southern 
states,  though  the  details  are  less  direful.  It  was  one  of  trust 
funds  violated,  of  debt  accumulated,  and  of  receipts  and  ex- 
penditures, swollen  fictitiously  by  the  depreciation  of  the  paper 
money  in  which  they  were  payable,  monnting  large  to  meet  a 
growing  desperate  situation. 

The  only  expenditures  of  1861  to  reveal  a  state  of  war  were 
those  for  the  regiment  ordered'  raised  by  the  Constitutional 
Convention.  Total  warrants  drawn  for  these  purposes  amounted 
to  $79,870.33,  of  which  only  $2,139.35  was  for  the  regiment. 
The  total  net  expenditures  for  the  year  were  $577,593.51.  The 
total  net  expenditures  for  the  war  period  proper,   or   from 


^The  period  of  which  this  is  a  study  extends  from  August  31,  1860,  to 
June  8,  1865.  The  fiscal  j^ear  ending  August  31,  1861,  has  been  in- 
cluded not  because  the  finances  reflect  the  war  but  on  account  of  the 
legislation  which  made  the  initial  financial  provision  for  the  struggle. 


A  Financial  History  of  Texas  135 

August  31,  1861,  to  June  8,  1865,  were  $4,863,790.55.  The 
portion  of  this  that  was  of  a  military  character  is  $3,180,275.97. 
This  amount  does  not  represent  fully,  however,  the  expenditure 
attributable  to  the  war.  To  obtain  this  amount  there  should 
be  added  to  military  expenditures  those  for  hospital  facilities 
and  for  the  support  of  the  needy  families  of  Texas  soldiers. 
In  1862  and  1863  warrants  drawn  on  account  of  the  hospital 
fund  were  $104,493.58;  for  the  soldiers'  families,  $306,305.74; 
in  1864  and  1865  the  amounts  were  $107,446.02  and  $1,127,- 
814.73  for  the  respective  services, — or  a  total  for  the  four  years 
of  $1,646,060.07.  There  were  refunds  of  $41,950.77,  leaving  a 
net  amount  of  $1,604,109.30.  The  amount  of  these  warrants 
that  was  paid  cannot  be  stated.  Since  after  May  28,  1864,  civil 
appropriations  and  those  for  the  support  of  soldiers'  families 
were  payable  in  treasury  warrants,  it  may  be  assumed  safely 
that  the  warrants  drawn  in  1862  and  1863  were  paid  and  were 
therefore  included  in  the  comptroller's  items  of  expenditures. 
Because  of  this  element  of  conjecture,  however,  no  attempt  is 
made  to  state  the  absolute  amount  of  expenditures  incident  to 
the  war,  but  to  rest  content  with  the  statement  that  more  than, 
three-fourths  of  the  expenditures  were  attributable  to  it. 

A  part  of  the  military  expenditures  was  chargeable  to  the 
Confederate  States  government,  and  for  such  the  state  had  a 
claim  for  refund.  The  reports  do  not  indicate  that  there  were 
any  such  refunds,  but  at  the  close  of  the  war  the  Confederate 
government  was  indebted  to  the  state  in  the  sum  of  $399,751.90 
for  ordnance,  quartermaster,  medical,  and  such  stores.^ 

At  the  beginning  of  the  war  all  expenditures  were  made 
through  the  state  comptroller  and  the  state  treasurer  and  were 
pursuant  to  specific  legislative  appropriations.  In  December, 
1861,  Judah  P.  Benjamin,  Secretary  of  the  Confederate  Treas- 
ury, proposed  to  Governor  Lubbock  the  exchange  of  the  United 
States  bonds  then  in  the  state  treasury  to  the  credit  of  the 
school  fund  for  Confederate  bonds.^  The  need  of  secrecy  about 
such  a  transaction  and  the  necessity  also  of  some  organization 
to  superintend  the  defence  of  the  state  of  a  more  continuous 
and  adaptable  character  than  the  legislature  led  to  the  creation 


^Report  of  the  Comptroller,  1863-1865,  p.  14. 
=MSS.     Record  of  Military  Board  No.  101,  p.  5. 


136  Bulletin  of  tlie  University  of  Texas 

on  January  11,  1862,  o'f  the  Military  Board. ^  This  board  was 
known  as  the  Old  Board  and  was  composed  of  the  governor, 
the  comptroller,  and  the  treasurer.  It  was  reorganized  on 
April  12,  1864,  in  accordance  with  the  act  of  December  16,  1863, 
to  be  composed  of  the  governor  and  two  appointees,  and  was 
known  as  the  New  Board.-  The  duty  in  general  of  the  boards 
was  to  provide  for  the  military  defence  of  the  state  by  securing 
supplies  of  arms,  ordnance,  ammunition  and  other  stores. 

The  two  boards  drew  from  the  treasury  a  total  of  $1,651,- 
621.85,  divided  as  follows:^ 

In  Confederate  treasury  notes $257,191.90 

In  specie .7,729.95 

In  state  treasury  warrants . 25,000.00 

In  8  per  cent  state  bonds 595,000.00 

In  United  States  5  per  cent  bonds 634,000.00 

In  coupons  of  United  States  bonds 132,700.00 

"With  these  receipts  as  a  basis,  the  boards  carried  on  the 
varied  and  complex  operations  of  purchasing,  exporting,  and 
selling  cotton,  of  purchasing  and  importing  supplies,  of  manu- 
facturing arms  and  munitions,  and  of  working  the  salt  deposits 
in  Van  Zandt  County. 

The  Old  Board  purchased,  as  far  as  can  be  ascertained,  5,736 
bales  of  cotton,  for  which  $544,438.23  was  paid,  mostly  in  Con- 
federate notes  and  8  per  cent  state  bonds.  One  hundred  and 
twelve  bales  were  burned  or  otherwise  lost,  and  5,551  sold  for 
$434,454.38.  The  New  Board  purchased  266  bales,  211  of  which 
are  accounted  for  by  sale.  The  disposition  of  128  bales  of  the 
total  purchased  by  both  boards  is  unaccounted  for.  Besides 
these  direct  operations  in  cotton,  contracts  were  made  with 
individuals  to  export  their  own  cotton,  but  in  the  name  of  the 
I)oard.  These  contracts  promised  some  benefit  to  the  state,  as 
for  example,  the  return  of  supplies  which  would  be  subject  to 
purchase  by  the  board.     There  is  little  to  show,  however,  that 


^MSS.  Record  of  Military  Board  No,  101,  p.  14,  Laws  of  1862,  pp, 
.40,  45, 

-Laws  of  1863,  p.  26. 

^'Report  of  Pease  and  Palm,  1865,  p.  1.  This  published  account  is 
condensed.     For  the  full  report  see  Executive  Record  No.  281, 


A  Financial  History  of  Texas  VM 

any  important  amount  of  supplies  was  introduced  as  a  result 
of  these  private  contracts.  The  direct  operations  in  cotton, 
though,  resulted  in  the  securing  of  such  needed  supplies  as 
arms,  cartridge  boxes,  powder  flasks,  powder,  shoes,  cotton 
cards,  quinine,  etc. 

Mpst  important  of  the  funds  turned  over  to  the  board  were 
the  United  States  5  per  cent  bonds  belonging  to  the  school  fund. 
On  January  13,  1862,  an  agent  of  the  Confederate  States  gov- 
ernment received  from  the  Military  Board  100  of  the  bonds  of 
the  denomination  of  $1,000  each.  In  accordance  with  the  plan 
proposed  in  Secretary  Benjamin's  letter,  a  like  amount  of  8 
per  cent  Confederate  bonds  were  to  be  given  in  exchange. 
Secretary  Benjamin  shortly  decided,  however,  that  he  had  no 
authority  to  make  this  exchange,  but  that  he  would  purchase 
of  the  state  any  arms  or  munitions  of  war  which  might  be 
procured  for  the  bonds.  The  failure  at  this  time  to  negotiate 
the  bonds  for  supplies  terminated  the  whole  matter  between 
the  state  and  the  Confederate  governments,  and  the  bonds  were 
returned  to  the  Military  Board.^ 

Of  the  634  bonds  ^he  Old  Board  received  364  with  3,311 
interest  coupons  of  $25  each, — a  total  par  value  of  $546,775.00. 
These  bonds  and  coupons  were  sent  to  Mexico  and  Europe  for 
disposition,  but  fear  of  their  repudiation  resulted  in  but  few 
of  them  being  sold.  Only  44  bonds  and  310  coupons  were  sold 
by  the  Old  Board.  Their  par  value  was  $49,750.00,  and  they 
were  sold  for  $38,022.50. 

The  New  Board  was  responsible  for  139  bonds  and  633  cou- 
pons. Four  of  the  bonds  and  22  of  the  coupons  were  sold  for 
$4,550,  and  135  bonds  and  611  coupons  were  turned  over  to 
White  and  Chiles  for  cotton  cards  and  medicines.  The  state 
did  not  receive  the  supplies  contracted  for,  as,  according  to 
White  and  Chiles,  they  were  destroyed  in  transit  by  disbanded 
troops.^  Nineteen  bonds  and  80  coupons  were  turned  over  by 
Governor  Murrah  to  an  a^ent  to  be  disposed  of  for  medicine 
and  cotton  cards.  There  is  no  evidence  of  any  such  purchase, 
however,  and  the  person  to  whom  they  were  alleged  to  have 


^MSS.     Report  of  Military  Board,  1865;  File  Case  No.  55. 
^Texas  v.  White,  7  Wallace,  706  (1868).     See  also  report  of  Pease  and 
Palm,  p.  4. 


138  Bulletin  of  tlie  University  of  Texas 

been  given  denied  that  he  received  them  of  the  agent.^  The 
remainder  of  the  bonds  to  the  number  of  109  and  959  coupons 
were  returned  to  the  treasury  upon  the  institution  of  the  Pro- 
visional Government. 

The  Old  Board  erected  a  state  foundry  in  Austin  for  the 
manufacture  of  cannon,  also  a  factory  for  the  making  of  per- 
cussion caps.  The  foundry  cost,  including  expenses  of  oper- 
ation, $172,725,12 ;  the  cap  factory,  $100,292.29.  The  cessation 
of  the  military  demand  for  the  kind  of  cannon  made  at  the 
foundry,  and  the  greater  cost  of  public  over  private  operation 
of  the  cap  factory,  resulted  in  the  abandonment  by  the  New 
Board  of  the  operation  by  the  state  of  these  enterprises  and 
in  their  lease  to  private  individuals.- 

The  boards  and  their  successors  returned  to  the  treasury  a 
total  of  $1,006,279.30.  Most  of  the  sum,  $543,958.28,  was 
returned  in  1864,  and  in  Confederate  notes.  In  1865  unused 
United  States  bonds  and  coupons  to  the  amount  of  $129,975.00 
were  turned  over  to  the  Provisional  Government,  and  during 
the  period  from  October  13, 1865,  to  August  13,  1866,  $33,205.25 
was  returned  in  specie.  United  States  currency,  8  per  cent  state 
bonds,  and  state  treasury  warrants.  In  1876  a  net  amount  of 
$298,825.22  was  recovered  by  the  state  on  account  of  United 
States  bonds  and  coupons  of  the  par  value  of  $357,175.00  en- 
trusted by  the  board  in  April,  1862,  to  Mr.  J.  M.  Swisher  for 
disposition  and  which  were  committed  by  him  to  English  and 
German  bankers  for  sale.^ 

The  penitentiary  was  not  a  source  of  expense  to  the  general 
treasury  during  this  period,  but  was  self-sustaining.  The  ex- 
penditures of  the  school  fund  were  small,  amounting  to  only 
$114,544.26  in  the  four  years  1862-1865  as  against  $119,351.60 
in  1861.  The  heaviest  item  of  civil  expenditures  was  the  sup- 
port of  the  indigent  families  of  Texas  soldiers.*  The  county 
courts  w^ere  the  agencies  of  distribution,  and  beginning  in  May 


^Report  of  Pease  and  Palm,  p.  4. 

''MSS.     Report   of  Military   Board,   March,   1865;    File   Case   No.    55. 

^The  total  of  the  returned  amount  has  been  deducted  from  military 
expenditures. 

"Act  of  March  5,  1863;  Laws  of  1863,  Called  Sess.,  p.  12.  Act  of  De- 
cember 15,  1863;    Laws  of  1863,  p.   21. 


A  Finmwial  History  of  Texas  139 

of  1863  and  extending  to  the  close  of  the  war  the  assistance 
extended  was  nominally  large  but  really  small  on  account  of 
the  depreciated  value  of  the  notes  and  treasury  warrants. 
After  May,  1864,  the  medium  of  payment  was  treasury  warrants, 
but  these  soon  became  practically  worthless.  The  ordinary  civil 
expenditures — or  those  for  salaries,  support  of  departments  and 
state  institutions,  were  on  a  moderate  scale.  Salaries  remained 
unchanged  throughout  the  war  period,  and  their  recipients  were 
subject  to  the  hardship  of  having  to  meet  with  the  same  nominal 
receipts  prices  that  were  steadily  increasing  by  reason  of 
scarcity  of  products  and  inflation  of  the  currency. 


Chapter  2. 
receipts. 

Texas  entered  upon  the  war  period  in  an  unsatisfactory 
financial  condition.  In  1860  the  means  for  defending  the 
frontier  against  Indian  uprisings  were  largely  provided  by  the 
use  of  the  United  States  bonds  belonging  to  the  university  fund. 
Despite  the  recommendations  of  the  governor,  no  increased 
taxation  was  voted  at  this  time.  By  January  19,  1861,  the 
treasury  deficit  was  $817,827.00,  and  the  revenue  which  w^as  to 
come  in  before  the  end  of  the  fiscal  year  was  estimated  to  fall 
far  short  of  the  deficiency.^  Each  subsequent  year  saw  de- 
ficiencies, and  at  the  close  of  the  war  the  amount  of  treasury 
warrants  outstanding  was  $2,068,997.90. 

Net  receipts  in  1861  were  $509,788.64,  and  the  total  net 
receipts  during  the  war  period,  1862-1865,  were  $8,161,928.58. 
About  40  per  cent  was  from  taxes,  8  per  cent  from  sale  of  bonds, 
38  per  cent  from  the  penitentiary,  and  the  remainder,  14  per 
cent,  from  interest  on  the  bonds  in  the  school  fund,  the  sale  of 
land,  land  dues,  the  sale  of  public  property,  and  fees.  The 
proportion  of  receipts  derived  from  the  sale  of  bonds  does  not 
indicate,  however,  the  extent  to  which  the  state  used  its  credit, 
for  it  does  not  show  the  extent  of  indebtedness  to  special  funds 
for  assets  transferred,  or  the  floating  debt. 

By  the  close  of  the  war  a  complex  tax  system  had  been  de- 
veloped consisting  of  property  and  poll  taxes,  salary  and  occupa- 
tion taxes. 

A.     The  Property  Tax. 

The  ad  valorem  rate  of  the  general  property  tax  remained, 
against  the  counsel  of  the  governor,  at  121/2  cents  in  1861,  with 
an  additional  4  cents,  collectible  in  specie,  to  meet  the  interest 
and  provide  a  sinking  fund  for  the  $1,000,000.00  loan  authorized 
by  the  act  of  April  8,  1861.-     In  1862  the  rate  for  all  purposes 


^Message   of   Governor   Houston,   February   5,   1861;    House   Journal, 
8th  Leg.,  Extra  Sess.,  p.  17. 
^Laws    of    1861,    p.    39. 


A  Financial  History  of  Texas  lil 

was  raised  to  25  cents,  and  in  1863  to  50  cents,  which  'w^as  the 
rate  also  in  1864.  At  the  above  rates  the  taxes  assessed  were 
$465,494.00  in  1861,  $700,609.00  in  1862,  $1,675,954.00  in  1863, 
$1,790,959.00  in  1864,— a  total  of  $4,633,016.24.  Assessed  values 
showed  a  decrease  in  1861  and  1862,  but  in  1863  they  were 
$335,190,700.00,  and  in  1864,  $358,191,886.00  as  compared  with 
$294,315,659.00  in  1860.  The  number  of  acres  of  land,  of 
negroes  and  other  objects  of  assessment  changed  but  little 
durino-  these  years,  so  that  the  increase  in  assessed  values  was 
due  to  higher  valuations  which  were  the  result  mainly  of  the 
inflated  state  of  the  currency. 

The  act  of  April  3,  1861,  permitted  non-residents  of  the 
counties  to  return  land  for  taxation  either  in  the  county  of 
their  residence  or  in  the  county  of  its  location,  and  the  result 
was,  as  formerly,  that  a  large  amount  escaped.^  Unrendered 
land  amounted  to  34,659,321  acres  in  1861,  29,320,425  in  1862, 
47,854,029  in  1863,  34,970,258  in  1864,  and  56,821,220  in  1865.^ 
The  lands  sold  to  the  state  for  taxes  for  the  years  1861-1864 
were  7,100,000  acres.  Since  from  the  beginning  of  statehood 
to  1861  the  total  sold  was  17,594,229  acres,  the  forfeitures 
during  the  war  were  Extraordinarily  large.  The  total  number 
of  acres  redeemed  during  the  period  1846-1863  was  only 
1,065,600.^ 

B.     The  Poll  Tax. 

By  the  act  of  January  13,  1862,  the  poll  tax  was  raised  from 

50  cents  to  $1.00,  and  was  assessed  throughout  the  war  on  all 

male  persons  over  21  years  of  age.*     The  assessments  were  as 

follows : 

1861 $28,521.00 

1862 66,776.00 

1863 .  53,798.00 

1864 75,204.00 

1865. 5.6,529.00 

^Ibid.,  p.  33. 

^Report  of  the  Acting-Provisional  Comptroller,  1866. 
'Report  of  the  Comptroller,    1868-9,    pp.    110-111. 
*Laws  of  1862,  p.  50. 


142  Bulletin  of  the  University  of  Texas 

C.    Business  Taxes. 

An  extensive  system  of  occupation  taxation  was  begun  by  the 
act  of  January  13  1862.^  Some  features  of  this  act  were  the 
reimposition  of  a  license  charge  upon  doctors,  lawyers,  and 
dentists, — a  practice  which  had  been  in  abeyance  since  1848;  a 
tax  of  $50  upon  insurance  companies, — which  marks  the  beginning 
in  this  state  of  special  taxes  upon  corporations ;  and  the  absence 
of  any  occupation  taxes  upon  mercantile  establishments  other 
than  the  regular  ad  valorem  rate  upon  goods  purchased  or  re- 
ceived for  sale.  By  the  act  of  March  6,  1863,-  lawyers  and 
doctors  were  exempted  from  payment  of  a  license  charge,  and  in 
order  to  discourage  the  conversion  of  corn  into  liquor,  a  tax  of 
$1,000  was  laid  on  each  still.  The  still  tax  was  repealed  in  De- 
cember, 1863,  but  was  reimposed  in  November,  1864,  as  were 
also  the  license  taxes  upon  doctors  and  lawyers.^ 

A  system  of  taxes  on  the  sales  of  distilled  spirits,  fermented 
liquors  and  wines  was  adopted  December  15,  1863.*  The  taxes 
were  payable  monthly,  and  the  rates  were  proportioned  to  the 
value  per  gallon.  These  taxes  were  described  in  the  statutes  and 
were  popularly  know^n  as  ''income"  taxes.  By  the  act  of  De- 
cember 16,  1863,  those  engaged  in,  the  sale  of  merchandise  were 
subject  to  a  tax  of  50  cents  on  each  $100  proceeds  of  sales,  and 
1  merchandise  was  subject  to  no  other  state  taxation.  This  was 
Mmown  as  the  "merchandise  tax."  Assessors  and  collectors  were 
required  to  call  once  in  every  three  months  and  get  returns  of 
sales  under  oath.  The  act  of  November  15,  1864,  replaced  the 
graded  liquor  income  tax  by  by  one  that  levied  simply  5  per  cent 
on  gross  sales,  and  modified  and  extended  the  taxation  of  gross 
receipts.  The  several  occupations  and  professions  taxed  were 
classified  and  different  fixed  charges  and  percentage  rates  ap- 
plied. Wholesale  merchants  were  subject  to  a  tax  of  $300  and  1 
per  cent  on  gross  receipts ;  retail  merchants,  druggists,  and  auc- 
tioneers, $100  and  1  per  cent.  Those  keeping  a  billiard  hall  or 
nine  or  ten  pin  alley,  doing  a  storage  business,  and  cotton  com- 


4bid. 

=Laws  of  1863,  Called  Sess.,  p.  25. 

'Act  of  December  16,  1863;  Laws  of  1863,  p.  48.     Act  of  November  15, 
:1864;  Laws  of  1864,  Second  Called  Sess.,  p.  7. 
*Laws  of  1863,  p.  16. 


A  Financial  History  of  Texas  J  41} 

pressing  and  insurance  companies,  were  subject  to  a  tax  of  $100 
and  2  per  cent  on  gross  receipts.  Kailroad  companies  were  sub- 
ject to  a  tax  of  one-fourth  of  1  per  cent  on  their  gross  receipts ; 
but  no  special  provision  was  made  for  the  determination  of  the 
amount  of  gross  receipts  or  for  the  collection  of  the  tax. 

£>.     Income  Taxation. 

Under  the  amended  Constitution  of  1861,  as  under  the  original 
of  1845,  the  legislature  had  the  power  to.  lay  an  income  tax.  A 
beginning  of  income  taxation  was  made  in  the  act  of  January  13, 
1862,  which  imposed  on  each  person  having  a  fixed  annual  salary, 
w^hether  a^  a  public  officer  or  by  private  contract,  25  cents  on  each 
$100  of  such,  salary  over  $500.^  The  tax  was  self  assessed  and 
no  penalties  were  prescribed  for  failure  of  returns.  This  salary 
tax  was  not  re-enacted  in  the  act  of  December  16,  1863,  which  ap- 
plied the  principle  of  income  or  receipts  taxation  to  the  merchan- 
dise business,  as  it  had  been  applied  to  the  liquor  business  in  the 
act  of  December  15,  1863.  It  was  not  until  November  15,  1864, 
that  the  principle  was  extended,  though  it  was  yet  so  restricted  as 
to  make  the  tax  an  occupation  tax  rather  than  an  income  tax  in 
the  accepted  sense  of  the  term.  Dentists  and  lawyers  became  sub- 
ject to  a  tax  of  2  per  cent  on  the  gross  receipts  from  their  profes- 
sions, and  presidents,  directors,  conductors,  engineers,  secretaries 
and  clerks  of  railroad  companies,  and  doctors  to  a  tax  of  1  per 
cent.  Those  engaged  in  agriculture  and  mechanical  pursuits  and 
those  in  general  who  enjoyed  fixed  incomes  were  not  taxed  on 
their  income  as  such.  The  income  tax  as  thus  levied  was  there- 
fore a  partial  one. 

E.    Receipts  from  Taxes. 

The  financial  reports  of  this  period  do  not  classify  the  receipts 
from  the  several  taxes,  and  for  the  general  property  tax  and  the 
poll  tax  one  must  rest  content  with  the  assessments  to  get  an  idea 
of  their  importance  in  the  tax  system.  The  amount  received 
from  license  taxes  in  1861  was  $43,097.  No  similar  statistics  are 
available  for  1862.  In  1863  the  tax  on  sale  of  merchandise  pro- 
duced $21,892.53;  the  tax  on  distilleries,  $34,383.30;  and  the 
taxes  on  other  occupations,  $13,932.38.  -  In  1864  the  tax  on  sales 


'lAws  of  1862.  D.  50. 


144  Bulletin  of  tJie  University  of  Texas 

of  merchandise  brought  in  $54,315.76;  the  liquor  receipts  tax, 
$67,423.35 ;  while  the  license  tax  on  distillers  produced  $43,883.28, 
and  the  taxes  on  other  callings  only  $13,392.62.  More  than  62 
per  cent  of  the  taxes,  other  than  ad  valorem,  in  1864  were  thus 
obtained  from  the  liquor  business.  The  act  of  November,  1864, 
was  very  productive,  the  revenue  in  1865  on  account  of  it  being 
$308,582.39.  The  license  tax  on  distillers  and  other  callings  con- 
tributed $172,279,  the  merchandise  and  income  tax,  $136,303. 

The  laws  imposing  the  gross  receipts  taxes  especially  were  not 
strictly  drawn,  and  this  fault  and  the  disorganization  of  conditions 
generally  resulted  in  evasion  and  in  the  imperfect  assessment  and 
collection  of  all  taxes.^  As  to  the  tax  on  professions,  which  is  tho 
tax  nearest  to  income  taxation  in  the  financial  history  of  Texas, 
Governor  Throckmorton  later  said  that  its  yield  was  small  and 
that  it  operated  oppressively  and  unequally.  He  recommended  a 
minimum  exemption  with  a  graduated  but  moderate  rate  on  'the 
remainder. - 

In  estimating  the  burden  of  taxation  account  must  be  taken  of 
the  taxes  levied  and  collected  by  the  Confederate  States'  govern-* 
ment.  In  the  administration  of  the  Confederate  taxes  there  was 
a  chief  collector  for  the  state  and  assessors  and  collectors  for  the 
districts  into  which  the  state  was  divided  for  purposes  of  tax- 
ation. Texas  was  one  of  the  two  states,  Florida  being  the  other, 
which  did  not  permit  their  tax  officers  to  serve  in  the  same 
capacity  for  the  Confederate  government.  It  was  also  one  of 
the  two  states,  Mississippi  being  the  other,  which  did  not  assume 
their  quota  of  the  Confederate  direct  taxes.^  Confederate  tax- 
ation w^as  much  heavier  and  more  rigorously  collected  than  was 
state  taxation,  and  it  amounted  for  the  four  years  1861-1864  to 
the  huge  sum  of  $37,486,854.43.  Only  $26,904.64  of  this  amount 
was  collected  in  specie.* 


^Message  of  Governor  Murrah,  October  20,  1864;  Executive  Record 
No.  280. 

'Message,  August  18,  1866. 

^Smith,  The  History  of  the  Confederate  Treasury,  p.  25. 

^Condensed  account  of  G.  J.  Durham,  collector  of  Confederate  tax  for 
Texas,  in  the  Weekly  Southern  Intelligencer,  August  11,  1865. 


A  Financial  History  of  Texas  145 

F.  Public  Lands. 

There  was  little  demand  for  the  public  lands  during  the 
period  of  the  war,  and  the  receipts  from  sales  were  almost  en- 
tirely in  the  form  of  treasury  warrants.  The  act  of  January  1, 
1862,  made  two  important  amendments  to  the  law  of  February 
11,  1858.  One  of  these  lowered  the  price  of  the  $1.00  lands  to 
fifty-five  cents,  and  the  other  directed  that  the  proceeds  should 
accrue  to  the  general  revenue  fund  instead  of  to  the  common 
school  fund.^  No  changes  were  made  in  the  prices  of  the  lands 
r'.n  the  islands  and  in  the  railroad  and  other  surveys.  With  the 
hope  of  getting  more  revenue  and  in  order  to  offset  the  deprecia- 
tion of  the  Confederate  notes  and  state  warrants  the  prices  of 
all  lands  were  changed  in  1863.  The  fifty-five  cent  land  was 
raised  to  $2.00  and  the  price  of  other  lands  was  advanced  to 
$5.00.2  The  acts  of  December  15,  1863,  aiid  November  7,  1864, 
authorized  grants  of  land  to  any  one  erecting  and  putting  into 
successful  operation  by  March  1,  1865,  machinery  for  the  manu- 
facture of  iron,  cotton,  wool,  firearms,  nitre,  sulphur,  powder, 
salt,  cotton  or  woolen  cards,  spinning  jennies,  paper,  and  oil. 
Grants  were  made  on  the  basis  of  320  acres  for  each  $1,000 
worth  of  machinery.^ 

G.  Character  of  Receipts. 

The  act  of  February  9,  1861,  authorized  the  receipt  of  10  per 
cent  interest  warrants  in  payment  of  land  and  the  2  per  cent 
sinking  fund  of  railroad  bonds  held  by  the  school  fund,  and 
the  act  of  January  11,  1862,  made  all  treasury  warrants  receiv- 
able in  payment  of  land.*  After  January  11,  1862,  treasury 
warrants  and  Confederate  notes  were  receivable  for  taxes  and 
all  other  public  dues,  except  for  the  specie  loan  tax  and  for 
interest  and  principal  of  the  railroad  loans  by  the  school  fund.^ 


^Laws  of  1861-1862,  p.   22. 

=Laws  of  1863,    Extra    Sess.,    9th   Leg.,    p.    11. 

^Laws  of  1863,  10th  Leg.,  p.  22.  Laws  of  1864,  10th  Leg.,  Second  Called 
Sess.,  p.  3. 

*Laws  of  1861,  p.  19.     Laws  of  1862,  p.  22. 

^Laws  of  1862,  p.  37.  The  Tri-Weekly  Telegraph,  December  2,  1861, 
noted  that  state  treasury  warrants  passed  at  a  discount  of  from  50  to 
60  per  cent,  and  it  dissented  from  Governor  Lubbock's   recommenda- 


10— H 


146  Bulletin  of  the  University  of  Texas 

The  act  of  December  16,  1863,  however,  made  treasury  warrants, 
bonds  and  interest  coupons  of  the  state  receivable  in  payment  of 
railroad  indebtedness  to  the  school  fund.^ 

The  great  depreciation  of  Confederate  notes  led  in  the  spring 
of  1864  to  the  law  w^hich  provided  that  after  the  last  day  of 
June  and  until  October  31,  Confederate  notes  of  the  old  issue 
of  the  denomination  of  $100  should  not  be  receivable  for  public 
dues  except  at  a  discount  of  one-third  and  that  no  Confederate 
notes  bearing  interest  should  be  received  after  the  last  day  of 
June.^  The  purpose  of  this  legislation  was  to  compel  the  fund- 
ing of  the  old  issue  into  Confederate  bonds  and  to  sustain  the 
value  of  the  new  issue. 

The  specie  needed  to  meet  the  interest  and  sinking  fund  re- 
quirements of  the  $1,000,000  loan  issue  of  1861  w-as  provided  for 
by  a  special  specie  tax.^  This  special  tax  began  to  fail  in  the 
early  part  of  1863,  and  for  the  year  ending  August  31,  1864, 
produced  only  $1,352.77  in  specie.  By  the  act  of  March  3,  1863, 
it  was  provided  that  the  tax  might  be  paid  in  other  funds,  and 
the  Military  Board  was  authorized  to  obtain  the  specie  required 
for  interest.*  The  history  of  this  special  tax  well  illustrates  the 
disappearance  of  specie  from  general  circulation.  Receipts  in 
1862  on  account  of  it  were  $36,900.06,  all  of  which  was  in  specie ; 
in  1863,  $123,608.09,  of  which  $57,549.18  was  in  specie;  in  1864 
$152,369.94,  of  which  $1,352.77  was  in  specie.  In  1865  the  specie 
receipts  were  not  derived  from  taxation,  but  were  provided  by 
the  Military  Board. 

By  the  act  of  January  14,  1862,  the  disbursement  of  Confeder- 
ate notes  was  restricted,  except  for  about  $30,000.,  to  the  payment 


^Laws  of  1863,  p.  37.  Act  of  May  28,  1864;  Laws  of  1864,  Called 
Sess.,  p.  9.  Act  of  November  15,  1864;  Laws  of  1864,  Second  Called  Sess., 
p.  14. 

=^Act  of  May  27,  1864;   Laws  of  1864,  Called  Sess.,  p.   6. 

^Laws  of  1861,  p.    39. 

*Laws  of  1863,  Called  Sess.,  p.  8.    . 

tion  that  Confederate  notes  should  be  made  receivable  for  public  dues. 
This  paper  opposed  also  the  funding  of  state  warrants  and  urged  that 
the  best  way  of  making  them  approximate  par  was  to  make  them  re- 
ceivable for  taxes  and  other  public  dues,  and  advised  that  to  this  end 
taxation  should  be  increased  and  expenditures  decreased.  See  issues 
.of  December  16,  1861,  and  October  26,  1864. 


A  Financial  History  of  Texas  147 

of  military  appropriations/  Other  appropriations  were  payable 
in  specie  or  in  treasury  warrants.  Inasmuch,  however,  as  the 
revenue  was  collected  principally  in  notes  and  to  a  much  larger 
amount  than  military  expenditures  could  absorb,  the  act  of 
March  6,  1863,  provided  that  all  appropriations  should  be  pay- 
able in  notes.- 

In  the  spring  of  1864  the  Confederate  currency  was  rated  in 
specie  at  from  20  to  30  cents  on  the  dollar.^  The  state  recognized 
by  the  act  of  May  27,  1864,  a  depreciation  of  SSy^  per  cent,  and  by 
the  act  of  May  28,  1864,  made  appropriations  for  the  support  of 
^the  civil  departments  of  the  government  and  for  the  indigent 
families  of  Texas  soldiers  payable  in  treasury  warrants.  These 
warrants,  however,  enjoyed  no  better  credit  than  the  notes  had 
had,  and  were  quoted  in  the  fall  of  1864  at  8  and  10  cents  on  the 
dollar.*  The  constitutionality  of  the  issue  of  treasury  warrants 
which  would  perform  some  of  the  functions  of  money  was  ques- 
tioned, but  a  majority  of  the  senate  judiciary  committee  held 
that  they  were  not  money  and  were  not  intended  to  circulate  as 
money.'^  This  was  also'  the  opinion  of  the  Supreme  Court  of  the 
United  States  in  1899  in  the  case  involving  the  validity  of  the 
payments  of  warrants  to  the  school  fund  by  the  railroad  com- 
panies.^ 

The  bulk  of  receipts  during  the  war  period  was  in  Confederate 
notes  and  treasury  warrants.  During  the  five  years  1861-1865, 
$948,711.34  of  treasury  warrants  was  received,  distributed  as 
follows: 

1861 $  12,278.21 

1862 27,654.15 

1863 333,946.77 

1864 393,544.57 

1865 181,287.64 

^Laws  of  1862,  p.   52. 

^Laws  of  1863,  Called  Sess.,  p.  23.  Message  of  Governor  Lubbock, 
February  5,  1863. 

"Message  of  Governor  Murrah,  May  11,  1864;  Executive  Record 
No:  280. 

^Proclamation  of  Governor  Murrah,  September  13,  1864;  Executive 
Record  No.  280. 

'^The  Tri-Weekly  Telegraph,  December   9,   1864. 

«H.  &  T.  C.  R.  R.  Co.  v.  Texas,  177  U.  S.,  83    (1899). 


148  Bulletin  of  tlie  University  of  Texas 

No  distinction  was  made  in  the  financial  reports  betwiien  Con- 
federate notes  and  specie  until  the  year  beginning  September  1, 
1862,  which  would  indicate  that  by  that  date  the  disproportion 
in  the  amounts  of  notes  had,  begun  to  complicate  the  operations 
of  the  treasury.  During  the  three  years  1863-1865,  specie  re- 
ceipts amounted  to  only  $163,647.37,  the  most  of  which  was 
credited  to  the  special  loan  account  and  was  secured  for  this 
account  by  the  Military  Board.  The  specie  receipts  were  dis- 
tributed as  follows: 

1863 $72,149.97 

1864 2,323.42 

1865 89,173.98 

Receipts  of  Confederate  notes  were  $957,137.96  in  1863 ;  $3,- 
652,813.91  in  1864,  and  $1,559,757.88  in  1865— a  total  of  $6,- 
169,709.75.  In  the  Fox  Table^  of  currency  values,  the  average 
value  of  $1  in  gold  was  $5.88  in  Confederate  notes  in  1863; 
$19.89  in  1864.  On  the  basis  of  this  scale  of  depreciation  the 
receipts  in  Confederate  notes  in  1863  were  equivalent  to  $162,- 
778  in  specie ;  the  receipts  in  1864  to  $183,650  in  specie. 

Besides  the  excessive  amount  of  Confederate  notes  in  circula- 
tion which  receipts  of  the  state  and  the  Confederate  government 
would  indicate,  there  were  state  treasury  warrants,  city  and 
county  warrants,  and  the  notes  of  individuals  and  corporations. 
The  effect  of  this  inflation  of  the  circulating  media,  together 
with  the  scarcity  of  commodities,  Avas  an  enormous  rise  in  prices. 
As  early  as  January,  1862,  the  currency  became  redundant,  and 
before  the  end  of  the  year  public  meetings  were  called  in  various 
parts  of  the  state  to  consider  the  rise  in  prices.  The  depreciation 
of  the  currency  was  popularly  ascribed  to  the  perversity  of  ' '  mer- 
chants ' '  and  ' '  capitalists, ' '  and  tariffs  of  prices  and  other  coercive 
measures  were  suggested  as  remedies,  but  none  was  enacted.^ 


^For  Fox  Table,  see  Appendix,  table  18. 

^The  Tri-Weekly  Telegraph,  August  4,   December  10,   1862;    January 
9,  January  23,  May  25,  1863. 


Chapter  3. 
public  debt. 

From  the  beginning  of  statehood  to  1860  Texas  had  no  public 
debt  other  than  that  inherited  from  the  Republic  of  Texas.  The 
inadequacy  of  the  revenue  system  and  the  increase  in  expenditures 
due  to  frontier  defence  led  to  a  deficit  in  1860,  one  consequence 
of  which  was  a  practical  suspension  of  payment  of  what  remained 
of  the  debt  of  the  republic.  There  was  paid  on  this  debt,  how- 
ever, $8,520  in  1861,  $1,783.80  in  1862,  and  $20  in  1863.  Another 
result  of  the  deficit  was  the  appearance  of  a  floating  debt.  The 
act  of  February  14,  1860,  authorized  the  issue  of  10  per  cent 
interest  warrants,  when  there  was  not  money  in  the  treasury; 
and  the  act  of  March  20,  1861,  authorized  the  issue  of  $300,000, 
10  year,  8  per  cent  bonds  for  the  purpose  of  funding  the  war- 
rants issued  for  the  protection  of  the  frontier  from  Indian  and 
Mexican  depredations.^  This  funding  act  was  repealed  January 
11,  1862,  after  $16,000  of  warrants  had  been  funded. 

The  important  loan  act  during  the  Avar  period  was  that  of  April 
8,  1861,  which  authorized  a  loan  of  $1,000,000,  to  bear  8  per  cent 
interest  and  to  run  16  years.-  A  specific  tax  of  4  cents  on  the 
$100  to  pay  the  interest  and  maintain  a  sinking  fund  was  also 
authorized  by  the  act,  but  it  was  not  until  January  11,  1862,  that 
it  was  provided  that  this  tax  should  be  a  specie  tax.^  Under  the 
provisions  of  this  act  $917,000  of  bonds  were  issued,  $294,000  of 
which  were  used  in  funding  state  warrants,  $28,000  in  paying 
debts  contracted  under  the  authority  of  the  Constitutional  Con- 
vention of  1861,  and  $595,000  were  turned  over  to  the  Military 
Board.  Seventeen  thousand  dollars  of  the  bonds  given  to  the 
Military  Board  were  returned  and  $1,000  mutilated,  leaving  a  net 


^Laws  of  1860,  p.  115.     Laws  of  1861,  p.  24.     Act  of  January  11,  1862; 
Laws  of  1862,  p.  44. 
^Laws  of  1861,  p.  39. 
=^Laws  of  1862,  p.  37. 


150  Bulletin  of  tlie  University  of  Texas 

amount  outstanding  of  $899,000.  The  net  amount  for  which  the 
Military  Board  was  responsible  was  $578,000.^ 

The  act  of  December  16,  1863,  authorized  the  issue  of  $2,000,- 
000,  7  per  cent  bonds,  payable  6  to  12  years  after  the  close  of  the 
war,  for  the  purchase  of  cotton.^  Certificates  for  these  bonds  to 
the  amount  of  $195,190.29  were  issued,  but  only  45  bonds  were 
issued  and  delivered  in  redeeming  certificates.  This  debt  with  in- 
terest amounted  at  the  close  of  the  war  to  $211,130.83.^ 

The  only  other  bonds  authorized  and  issued  were  6  per  cent 
bonds  to  fund  the  treasury  warrants  received  by  the  school  fund 
for  interest  and  principal  payments  by  the  railroads.*  OP  these 
there  was  issued  a  total  of  $320,367.13,  all  of  which  was  held  by 
the   school  fund.^ 

The  8  and  7  per  cent  bonds  were  disposed  of  to  citizens  of  the 
state  for  cotton,  currency,  and  military  equipment  and  supplies. 
The  cotton  purchased  was  transported  to  Mexico  and  either  ex- 
changed for  military  supplies  or  sold  and  the  proceeds  used  to 
purchase  the  supplies.  After  the  organization  of  the  Military 
Board  it  issued  a  stirring  circular  address  to  the  people  of  the 
state  calling  upon  them  to  take  the  bonds  at  par  for  their  cotton. 

^The  following  is  a  statement  of  the  disposition  of  the  bonds  held  by 
the  Military  Board  up  to  January  1,  1863,  the  only  period  for  which  an 
itemized  statement  is  obtainable: 

299  were  sold  for  Confederate  money. 

3  were  sold  for  Nichols'  guns. 

3  were  sold  for  sulphur  and  saltpeter. 

20  were  paid  for  the  steamer  Bayou  City. 

21  were  paid  for  alterations  and  repairs  on  the  steamer  and  for  re- 
moving obstructions  from  Buffalo  Bayou  and  Galveston  Bay. 

114  were  used  in  the  redemption  of  cotton  certificates. 

Total,  460. 

Par  value $460,000.00 

Premiums 16,422.60 

Total  value $476,422.60 

MSS;  File  Case  No.  54,  State  Department. 

-Laws  of  1863,  pp.  9,  29. 

^Report  of  Pease  and  Palm,  p.  8. 

*Act  of  December  16,  1863;  Laws  of  1863,  p.  37.  Act  of  November 
15,  1864;  Laws  of  1864,  Second  Called  Sess.,  p.  14. 

''Report  of  the  Comptroller,  1863-1865,  p.   7. 


A  Financial  History  of  Texas  151 

The  cotton  growing  part  of  the  state  was  divided  into  di«tricts 
and  agents  were  appointed  in  each  to  take  subscription  to  the 
loan  in  either  cotton  or  money.  Upon  the  purchase  of  any  cotton^ 
or  the  sale  of  bonds  for  money,  the  agent  took  a  bill  of  sale  and 
delivery  and  executed  a  receipt  or  certificate  to  the  seller,-  which 
certificate  entitled  the  seller  to  bonds  of  even  date/ 

The  interest  on  the  7  and  8  per  cent  bonds  was  payable  in 
specie.  Specie  interest  payments  were  $6,009.61  in  1862.  $46,- 
586.11  in  1863,  $40,502.90  in  1864,  $72,696.61  in  1865.  These 
amounts  were  paid,  though  apparently  somewhat  irregularly, 
but  despite  them  the  value  of  the  bonds  fell  in  1864  to  less  than 
25  cents  on  the  dollar.-  The  provision  in  the  8  per  cent  loan  act 
for  a  sinking  fund  w^as  not  observed  in  respect  to  a  specie  fnnd. 

Treasury  warrants  outstanding  at  the  close  of  the  war  amounted 
to  $2,068,997.90,  about  $180,000  of  which  were  10  per  cent  inter- 
est warrants.  In  1863  and  1864  these  had  a  value  in  specie  of  8 
and  10  cents  on  the  dollar.^  There  were  at  all  times  in  1863,  1864, 
and  1865  enough  Confederate  notes  in  the  treasury  to  redeem  all 
the  outstanding  warrants,  but  the  holders  held  them  back  with  the- 
expectation  of  ultimately  getting  something  better  in  pajonent.* 

The  state  was  indebted  to  special  trust  funds  to  the  amoumit  of 
$1,455,913.86  on  account  of  United  States  bonds  and  specie  usedl 
and  for  evidences  of  state  indebtedness  received  in  the  collection 
of  revenue.  The  school  fund  was  due  $1,137,406.05,  the  univer- 
sity fund,  $283,514.22,  and  other  special  funds,  $34,892.49/' 

The  amount  due  soldiers  and  for  supplies  was  estimated  at 
$3,150,000 ;  the  unpaid  debt  of  the  republic  at  $110,613.23 ;  mift- 


'MSS.  Record  of  Military  Board,  No.  101.  On  November  26,  1862,  the 
board  opened  bids  for  $100,000  of  the  8  per  cent  bonds.  There  were  bids 
for  $136,000  or  136  bonds.  For  23  bonds  a  premium  of  12  per  cent  was. 
offered;  for  25,  10  per  cent;  and  for  6,  12^/4  per  cent.  The  bids  for 
these  54  bonds  were  in  Confederate  money  and  amounted  to  $59,995> 
On  the  basis  of  the  Fox  Table  of  $1  in  gold  for  $3,75  Confederate  notes,, 
the  specie  value  of  the  bids  was  equivalent  to  $15,998.66. 

-Message  of  Governor  Murrah,  October  20,  1864;  Executive  Record,, 
No.  280. 

^Message  of  Governor  Murrah,  October  20,  1864. 

"MSS.  Report  of  Pease  and  Palm;  Executive  Record  No.  281,  p.  118. 

^MSS.  Report  of  Pease  and  Palm;  Executive  Record  No.  281,  p.  116. 


152  Bulletin  of  the  University  of  Texas 

cellaneous  debt  at  $199,176.^  The  total  debt  was  $8,110,832.58. 
Deducting  the  debt  of  the  republic,  there  remains  $8,000,219.35 
which  represents  the  debt  incurred  from  1860  to  the  close  of  the 
war. 


^Ibid.,  pp.  118-119. 


Chapter  4. 


SCHOOL  AND  UNIVERSITY  FUNDS. 


The  amount  due  the  school  fund  at  the  close  of  the,  war  was 
$1,137,406.65.  $766,700  of  this  was  for  United  States  bonds  and 
interest  coupons  transferred  to  the  Military  Board  in  Au^st 
and  November  of  1862 ;  $331,604.84  for  state  treasury  warrants 
received ;  $26,927  for  specie  used,  and  $12,173.93  for  interest  on 
state  bonds. 

Receipts  of  the  school  fund  from  taxes,  land  sales,  and  interest 
on  securities  amounted  during  the  four  years  1862-1865  to  $643,- 
525.81,  while  expenditures,  exclusive  of  investments,  amounted 
to  only  $114,544.26.  In  1861  loans  were  made  to  railroad  com- 
panies under  the  act  of  1856  to  the  amount  of  $190,500,  and  in 
1862  to  the  amount  of  $150,000.  These  loans  brought  the  total 
loaned  to  $1,816,500. 

The  railroad  companies  made  no  interest  payments  in  specie 
during  this  period,  but  in  accordance  with  the  acts  of  December 
16,  1863,  and  November  15,  1864,  they  paid  in  state  treasury 
warrants  a  total  of  $320,367.13  for  interest  and  principal  of 
bonds.  The  state  funded  the  warrants  in  6  per  cent  bonds,  and 
the  latter  remained  of  doubtful  validity  until  1883  when  they 
were  paid.  The  legality  of  the  payments  of  the  companies  in 
warrants  was  subsequently  contested  on  the  ground  (1)  that  the 
warrants  were  issued  for  the  purpose  of  being  circulated  as 
money  and  so  were  in  violation  of  the  state  constitution;  (2) 
that  they  were  bills  of  credit  emitted  by  the  state  and  were  there- 
fore in  violation  of  the  Constitution  of  the  United  States;  and 
(3)  that  the  acts  under  which  they  were  issued  and  paid  were  in 
aid  of  the  Rebellion  and  were  therefore  void.  The  decision  of 
the  Supreme  Court  of  the  United  States  was  against  the  state 
on  all  three  points.^ 

In  1876  $297,758.22,  out  of  a  total  of  $357,175  in  United 
States  bonds  and  coupons  originally  transferred,  was  recovered 
by  the  state  and  returned  to  the  school  fund. 


'H.  &  T.  C.  R.  R.  Co.  V.  Texas,  177  U.  S.,  66-103   (1899). 


154  Bulletin  of  tlie  University  of  Texas 

The  indebtedness  to  the  university  fund  at  the  close  of  the  war 
was  $283,514.22.  This  was  for  United  States  bonds  to  the  amount 
of  $100,000  and  specie  from  interest  and  land  sales  transferred 
to  state  revenue  account  in  1860-1862,  and  for  treasury  warrants 
and  Confederate  notes  received  in  payment  of  land  sales.  Re- 
ceipts of  this  fund  from  land  sales  during  the  four  years  1862- 
1865  amounted  to  $134,183.39.  There  were  no  disbursements 
other  than  transfers.  In  1866  5  per  cent  state  bonds  to  the 
amount  of  $134,472.26  were  placed  to  the  credit  of  the  fund 
to  replace  the  United  States  bonds  and  interest  used,  the  balance 
of  the  debt  not  beino^  recognized.  The  bonds  thus  credited  re- 
mained of  doubtful  validity  until  1883,  when  they  were  paid 
with  accumulated  interest;  $10,300.41  of  this  old  debt  of  war 
times  was  also  validated  and  paid  in  1883,  but  without  interest. 

The  effect  of  the  war  upon  the  school  and  university  funds 
was  to  strip  them  of  their  sources  of  revenue,  and  as  a  result  of 
conditions  brought  about  by  the  war,  education  in  Texas  was  set 
back  bv  more  than  two  decades. 


Chapter  5. 
condition  of  the  treasury  at  the  close  of  the  war. 

On  June  8,  1865,  the  total  cash  balances  on  hand  amounted  to 
$3,368,510.07.  This  was  made  up  of  $2,908,038.34  in  Confederate 
notes,  $445,074.37  in  state  paper,  and  $15,397.36  in  specie.  Only 
$362,548.11  of  the  Confederate  notes  were  actually  in  the  treas- 
ury, the  remainder,  $2,535,490.23,  Avere  old  issues,  and  had  been 
-turned  over  to  the  Confederate  States '  depository  to  be  exchanged 
for  new  issues.  In  addition  to  the  above  balance  there  was  in 
the  hands  of  the  Military  Board  $129,975  in  United  States  bonds 
and  interest  coupons.  This  latter  and  the  specie  were  the  only 
part  of  the  balance  that  was  of  value. 

The  finances  of  the  war  period  which  secession  inaugurated 
ends  June  8,  1865.  At  this  date  the  pen  which  traced  the  ledgers 
of  the  fiscal  department  of  the  state  government  stops  off  short, 
and  until  October  13, 1865,  when  the  work  of  accounting  is  again 
resumed  in  a  new  handwriting,  a  gap  of  blank  pages  follows — 
mute  witnesses  of  the  end  of  a  disastrous  struggle  and  of  the 
temporary  dissolution  of  state  government.  Social  disorder  at- 
tended the  break-up  of  the  Confederacy  and  on  the  night  of 
June  11,  1865,  the  state  treasury  was  broken  into  and  looted. 
There  was  little  of  value  in  it  that  was  negotiable,  so  that  the 
loss,  except  for  something  less  than  $5,000  in  specie,  was  not 
serious. 


PART  V. 

THE  RECONSTRUCTION,  1865-1874. 

Chapter  1. 

introduction. 

Although  General  Lee  surrendered  early  in  April,  1865,  the 
break-up  of  the  Confederacy  did  not  occur  in  Texas  until  the 
end  of  May.  Disorganization  of  all  authority  followed,  and  in 
the  general  confusion  Confederate  and  state  property  was  ap- 
propriated by  disbanded  soldiers  and  even  the  state  treasury  at 
Austin  was  looted.  The  loss  of  property,  however,  was  small 
and  the  disorder  little  when  viewed  against  the  background  of 
bitter  disappointment  and  uncertainty  of  the  future  which  the 
people  of  the  state  felt  on  account  of  the  downfall  of  the 
Confederacy. 

The  arrival  at  Galveston  on  June  19,  1865,  of  General  Gordon 
Granger  initiated  the  first  provisional  government — a  mongrel 
of  civil  and  militarj^  rule,  but  predominantly  military.  A.  J. 
Hamilton,  who  had  been  appointed  on  June  17  provisional  gov- 
ernor of  Texas  by  President  Johnson  arrived  at  Galveston  on 
July  21,  and  proceeded  soon  to  Austin  to  take  office.  After 
some  delay  a  registration  of  those  citizens  of  the  state  who  would 
take  the  oath  of  amnesty  was  made  and  an  election  of  delegates 
to  a  constitutional  convention  was  ordered.  The  convention  met 
in  Austin  on  February  7,  1866,  and  was  in  session  eight  weeks. 
In  the  election  that  followed  the  conservative  ticket,  or  that  en- 
dorsing President  Johnson's  policy  for  the  restoration  of  the 
state  governments,  headed  by  J.  W.  Throckmorton,  was  success- 
ful, and  the  amendments  to  the  constitution  were  adopted.  The 
newly  elected  government  took  possession  on  August  13,  1866, 
and  on  August  20  President  Johnson  declared  by  proclamation 
that  the  insurrection  in  Texas  was  at  an  end.  The  restoration 
of  civil  government  to  a  normal  state  and  the  amelioration  of 
general  conditions  were  terminated,  however,  by  the  reversal  by 
Congress  of  President  Johnson's  pplicy.  Under  the  provisions 
of  the  so-called  Reconstruction  Acts,  passed  in  March  and  July 
of  1867,  Texas  became  a  part  of  the  Fifth  Military  District,  and 


A  Financial  History  of  Texas  157 

went  again  under  a  provisional  form  of  government  wliieh 
lasted  from  August  8,  1867,  to  January,  1870.  Again,  also, 
the  process  of  emergence  from  the  provisional  form  of  govern- 
ment was  gone  through  with,  and  another  constitution  was  adopt- 
ed and  another  election  of  state  officials  was  held.  E.  J.  Davis 
was  the  new  governor  elected,  and  his  administration,  which  is 
popularly  known  as  the  period  of  radical  rule,  lasted  three  full 
years.  It  was  undermined  by  the  election  of  a  democratic 
legislature — the  famous  Thirteenth — in  November,  1872,  and  fell 
and  was  swept  away  by  the  election  in  December,  1873,  and  the 
inauguration  on  January  15,  1874,  of  Richard  Coke  as  governor, 
r  During  the  years  of  the  Civil  War  and  the  Reconstruction, 
and  especially  during  the  decade  1860-1870,  the  absolute  growth 
in  population  and  material  wealth  was  the  smallest  of  any 
decade  in  the  history  of  the  state.  Population  increased  from 
604,215  in  1860  to  818,579  in  1870.  This  was  a  percentage  in- 
crease of  35.5  as  compared  with  184.2  during  the  decade  1850- 
1860.  The  United  States  Census  of  1860  placed  the  number  of 
slaves  at  182,566  or  30.2  per  cent  of  the  total  population.  This 
vast  mass  of  propertyless,  ignorant  blacks  was  added  to  the  cit- 
izenship of  the  state  as  a  result  of  the  war,  and  by  1870  the  negro 
element  of  the  population  numbered  253,475,  or  30.9  per  cent  of 
the  total  population.  Nothing  w^as  done  up  to  1870  to  improve  the 
economic  or  intellectual  status  of  this  class,  and  nothing  could 
be  done  for  either  whites  or  negroes  because  of  the  misgovem- 
ment  at  Washington  and  the  prostrate  financial  condition  of  the 
state. 

The  amount  of  illiteracy  and  the  conditions  as  to  education 
pointed  to  the  greatest  task  of  the  state, — namely,  the  education 
of  its  citizens.  Thirty-three  per  cent  of  the  population  ten  years 
of  age  and  over  could  not  read,  and  there  were  only  548  schools 
in  1870,  with  23,076  pupils,  706  teachers,  and  a  total  income  of 
H14,800.i 

The  population  of  the  state  was  almost  wholly  employed  in 
agriculture,  and  this  added  to  the  difficulties  of  the  problem  of 
education.  Out  of  the  total  of  the  population  ten  years  and  over 
engaged  in  all  occupations  166,753,  or  70  per  cent,  were  engaged 


^Ninth  Census  of  the  United  States.     1870.     Vol.  Population,  p.  450. 


158  Bulletin  of  the  University  of  Texas 

in  agriculture.^  The  population  of  the  state  was  thinly  spread 
.  out,  the  average  density  being  3.1  persons  to  the  square  mile. 

Agriculture  showed  a  marked  decline  during  the  decade  1860- 
1870.  Evidences  of  this  decline  were  the  decrease  in  the  value 
of  the  farms  from  $88,101,320  to  $60,149,950,  or  45.4  per  cent, 
the  decrease  in  the  value  of  farming  implements  from  $6,259,452 
to  $3,396,793,  or  56.6  per  cent,  and  a  change  in  the  acreage  of 
land  in  farms  from  25,343,028  in  1860  to  18,396,523  in  1870, 
or  27.4  per  cent.  The  per  cent  which  farm  acreage  was  of  the 
total  area  of  the  state  declined  from  15.1  in  1860  to  11.0  in  1870. 
The  per  cent  of  land  in  farms  which  was  improved  increased, 
however,  from  10.4  to  16.1.  The  production  of  cotton  was 
431,463  bales  in  1859  and  350,628  in  1869.  The  price  of  cotton 
fluctuated  violently  during  the  period.  In  1865  the  price  was 
43.2  cents  per  pound  and  in  1870  it  was  17  cents. - 

Manufacturing,  railroad  construction,  and  banking  increased 
during  the  period.  The  railroad  mileage  grew  from  307  in 
1860  to  711  in  1870,  or  131  per  cent.  Manufacturing  establi.sh- 
ments  numbered  983  in  1860  with  a  value  of  products  of  $6,577,- 
202,  and  in  1870  they  numbered  2,399  with  products  valued  at 
$11,517,302.^  As  to  banking,  there  was  only  one  chartered  bank 
in  Texas  in  1860.  It  was  located  in  Galveston  and  had  a  capital 
of  about  $100,000.*  Four  national  banks  were  established 
in  1866,  and  this  number  remained  unchanged  until  1870.  Two 
of  the  national  banks  were  located  in  Galveston,  one  was  in 
Houston  and  one  was  in  San  Antonio.  Their  capital  and  sur- 
plus amounted  to  $575,000 ;  their  deposits  to  $617,000,  and  their 
loans  to  $532,000.^  The  Constitution  of  1869  abandoned  the 
policy    of    prohibiting    state    banks    which    had    been  followed 


^Ninth  Census  of  the  United  States.  1870.  Vol.  Industry  and  Wealth, 
p.  450. 

=The  average  prices  in  cents  per  pound  of  upland  cotton  were  in  other 
years  as  follows:    31.6  in  1866,  24.9  in  1867,  29  in  1868,  and  24  in  1869. 

'The  census  included  under  the  term  manufacturing  establishment 
purely  local  or  neighborhood  shops. 

^Eighth  Census  of  the  United  States.  1860.  Vol.  Mortality  and 
Miscellaneous  Statistics,  p.  29. 

''Report  of  the  Comptroller  of  the  Currency,  1888,  pt.  1,  p.  318. 


A  Fhmncial  History  of  Texas  ]59 

since  1846,  and  a  number  of  such  banks  were  organized.^  For 
the  state  as  a  whole  the  supply  of  credit  facilities  during  this 
period  was  in  the  hands  of  merchants  and  private  lenders,  and 
this  condition  of  affairs  continued  until  the  middle  of  the  eighties 
or  until  national  banks  came  to  be  more  widely  established. 
Although  the  Reconstruction  as  a  political  condition  ended  at 
the  close  of  1873,  and  though  the  financial  policy  came  under  the 
control  of  new  hands  at  the  beginning  of  that  year,  the  finances, 
industry  and  commerce  of  the  state  were  slow  in  recovering  from 
the  effects  of  the  war  and  radical  rule,  and  it  was  1880  before 
a  normal  condition  was  again  reached.  The  period  treated  in 
this  study,  however,  extends  from  the  close  of  the  war  through 
August  31,  1874. 


^The  state  banks  were  required  by  law  to  report  annually  to  the 
secretary  of  state,  but  the  law  was  not  obeyed.  The  taxation  of  the 
capital  and  deposits  of  such  banks  under  the  internal  revenue  laws  of 
the  United  States  made  it  necessary  for  the  banks  to  report  to  the 
commissioner  of  internal  revenue,  but  the  number  of  reporting  institu- 
tions was  not  given  by  the  commissioner  until  1876.  The  number  of 
state  banks  and  savings  banks  reported  in  1876  was  101,  with  a  com- 
bined capital  of  $3,302,388,  and  deposits  of  $4,713,759;  Report  of  the 
Secretary  of  the  Treasury  (IT.  S.),  1876,  p.  186. 


Chapter  2. 
expenditures. 

The  character  and  amount  of  expenditures  are  exhibited  in  the 
appendix.  The  table  there  presented  shows  only  the  amount 
of  warrants  drawn  during  each  fiscal  year;  and,  owing  to  a 
continued  treasury  deficit,  in  only  one  year,  1868,  is  the  amount 
of  cash  paid  out  of  the  treasury  the  same  as  the  amount  of^ 
warrants  drawn.  However,  as  the  w^arrants  drawn  were  de- 
mands upon  the  treasury  which  were  eventually  met,  the  table 
represents  the  policy  pursued  with  respect  to  expenditures. 

The  cost  of  administering  the  state  government  was  fluctuat- 
ing, but  on  the  whole  showed  an  upward  tendency  until  1870, 
and  after  that  year  took  a  violent  rise.  The  multiplication  of 
state  employees  and  especially  the  increase  in  salaries  and  con- 
tingent expenses  worked  to  swell  the  cost  of  running  the  several 
departments.  The  Constitution  of  1866  extended  the  term  of 
office  of  the  governor  to  four  years  and  provided  for  a  salary 
of  $4,000,  which  was  an  increase  of  $1,000  over  the  former  figure. 
This  was  further  increased  in  1870  to  $5,000.  The-  secretary  of 
state,  the  treasurer,  and  the  comptroller  each  received  annual 
salaries  of  $1,800,  and  the  commissioner  of  the  general  land 
office  $2,000,  until  1866,  when  all  were  increased  to  $2,500,  and 
in  1870  they  were  further  increased  to  $3,000.  Chief  clerks  after 
1870  received  $1,400  to  $1,600.  By  the  Constitution  of  1866  the 
number  of  judges  of  the  supreme  court  was  enlarged  from  three 
to  five,  and  the  minimum  salary  raised  from  $3,000  to  $4,500. 
The  minimum  salary  of  district  judges  also  was  raised  from 
$2,250  to  $3,500.  These  substantial  increases  in  salaries  were  ill- 
timed  and  were  beyond  the  ability  of  the  taxpaying  public. 
The  claim  for  an  increase  on  account  of  high  prices  was  stronger 
during  the  war,  but  neither  the  general  price  level  nor  the  op- 
portunities in  private  life  at  this  time  warranted  the  increases 
provided. 

Occasions  of  large  annual  expenditures  were  the  sessions  of 
the  legislature,  and  to  this  cost  of  law-making  may  be  added  that 
on  account  of  the  constitutional  conventions.     Legislative  ses- 


A  Financial  History  of  Texas  161 

sions  were  frequent  and  long  and  were  taken  up  largely  with 
private  legislation  which  could  have  been  avoided  to  a  great 
extent  by  a  general  corporation  law\^  The  legislature,  however, 
was  not  extravagant  in  the  matter  of  outlays  on  itself  either 
to  the  same  degree  or  in  the  same  fashion  that  characterized  other 
southern  legislatures  of  this  period.  Expensive  chamber  furniture 
and  other  furnishings,  and  champagne  and  cigars  to  enable  com- 
mittees to  endure  better  their  arduous  labor  do  not  shame  Texas 
legislative  annals  as  they  do  those  of  states  which,  like  South 
Carolina,  were  ridden  by  carpet-baggers.  There  were,  though, 
improper  expenditures  which  were  cloaked  under  the  blanket 
fippropriation  for  contingent  expenses;  pet  partisan  newspapers 
were  generously  subscribed  for;  and  the  mileage  and  per  diem, 
provided  were  unprecedentedly  liberal.^ 

While  the  state  departments  and  the  legislature  explain  a  part 
of  the  growth  of  expenditures  after  1870,  the  bulk  of  the  growth 
is  ascribable  to  other  objects.  The  cost  of  the  judiciary  more 
than  doubled,  but  the  organization  of  new  courts  and  the  activity 
of  the  state's  prosecuting  agents  account  largely  for  this.  The 
increase  in  fee  payments  to  sheriffs  and  prosecuting  attorneys 
w^as  marked,  but  the  fee  system  was  no  more  abused  at  this  time 
than  under  later  administrations.  After  1871  disbursements 
from  the  available  school  fund  took  a  leading  place  among  the 
state's  expenditures.  The  use  of  the  assets  of  the  school  fund 
during  the  war  and  the  failure,  due  chiefly  to  inability,  to  make 
restoration  or  reparation  to  that  fund  resulted  in  a  suspension 
of  its  functions  until  their  revival  by  the  act  of  1871.  There 
was  expended  out  of  this  fund  during  1872,  1873,  and  1874, 
$1,489,675,  as  against  $37,885  from  1865  through  1871.  Begin- 
ning in  1871  the  protection  of  the  frontier  settlements  against 
marauding  Indians  and  jMexicans  called  for  large  annual  outlays. 
The  need  of  protection  became  manifest  immediately  after  the 
war,  and  failure  of  the  Federal  government  to  extend  it  forced 


'Message  of  Governor  Davis,  January  10,  1871.  The  San  Antonio 
Daily  Herald,  April  20,  May  8,  and  June  11,  1873.  Proceedings  of 
Taxpayers'   Convention,    Austin,    1871,   p.    21. 

'Reconstruction  Journal,  1868,  p.  47.  The  San  Antonio  Daily  Herald,. 
June  11,  December  22  and  29,  1868.  Flake's  Daily  Bulletin,  August  27^ 
1868.     Message  of  Governor  Davis,  January  14,  1873. 

11— H 


162  Bulletin  of  tlie  University  of  Texas 

the  state  to  perform  the  duty.  Despite  expenditures  during  the 
four  years,  1871-1874,  of  $524,963,  the  protection  extended  was 
held  to  be  inadequate.^  The  expenditures  of  this  account  were 
subsequently  refunded  to  the  state  by  the  national  government, 
but  not  during  the  period  of  the  Reconstruction.  In  1888, 
$922,541.52  was  refunded;  in  1891,  $148,615.97.  These  amounts 
were  refunded  under  the  act  of  Congress  of  June  27,  1882,  and 
reimbursed  the  state  for  all  expenditures  of  this  character  be- 
tween 1866  and  1882.  Expenditures  for  the  asylums,  especially 
for  the  insane,  increased  during  this  period,  but  no  exception 
can  be  taken  to  the  better  provision  for  the  unfortunate  wards 
of  the  state.  There  appears  to  have  been  some  jobbery,  how- 
ever, in  connection  with  the  purchase  of  supplies  for  the  asylums 
and  the  repairs  of  public  buildings.-  Except  in  1869,  when  a 
large  amount  was  expended  for  support,  the  penitentiary  was 
not  an  expensive  institution.  The  expediency  of  leasing  it 
and  the  labor  of  the  convicts  was  suggested  in  1868  and  was 
carried  out  in  1871.  Thereafter  the  only  expense  of  the  state 
in  connection  with  it  was  for  the  transportation  of  prisoners. 

Perhaps  the  most  obnoxious  of  the  measures  of  the  E.  J. 
Davis  administration  was  that  providing  for  a  system  of  state 
police.  Warrants  drawn  on  account  of  the  state  police  and  the 
state  militia, — almost  wholly,  however,  for  the  police, — amounted 
during  the  period  1871-1874  to  $688,091,  or  15  per  cent  of  the 
total  of  warrants  drawn  on  the  general  revenue  fund.  The  per- 
sonnel of  the  police  body,  their  abuse  of  authority,  and  the  fact 
that  they  performed  functions  which  belonged  to  the  local  gov- 
ernments, led  to  the  abolition  of  the  system  by  the  Democratic 
legislature  in  1873.^ 

Texas  narrowly  escaped  during  this  period  the  subsidizing  of 
railroads  with  bonds, — a  policy  that  characterized  a  number  of 
southern  Reconstruction  governments  and  which  resulted  in 
grievous  financial  burdens  to  the  states.  The  constitution  of  1866 
empowered  the  legislature  to  guarantee  the  bonds  of  railroad 


^The  San  Antonio  Daily  Herald,  September  6,  1871.  Senate  Journal, 
12th  Leg.,  Adj.  Sess.,  p.  206. 

-Report  of  Committee  on  Asylums;  House  Journal,  14th  Leg.,  p.  14. 
Report  of  Committee  on  Public  Buildings;   ibid.,  p.  161. 

'Ramsdell,  Reconstruction  in  Texas,   pp.   302,   312. 


•  A  Fhmncial  History  of  Texas  163 

companies  to  any  amount  not  exceeding  the  sum  of  $15,000  per 
mile.  No  resort  was  made  to  this  provision  because  the  Constitu- 
tion of  1866  was  short  lived,  and  the  provision  was  believed  to  be 
in  conflict  with  section  33  of  the  constitution,  which  prohibited 
the  legislature  from  contracting  a  debt  to  exceed  $100,000,  ex- 
cept in  case  of  war,  to  repel  invasion,  or  suppress  insurrection.^ 
The  Constitution  of  1869  shut  out  land  grants  to  any  but  actual 
settlers,  but  permitted  bond  subsidies  to  internal  improvements. 
By  the  act  of  August  5,  1870,  incorporating  the  International 
Railroad  Company,  a  subsidy  in  8  per  cent,  thirty-year  bonds 
of  $10,000  a  mile,  was  granted,  and  an  ad  valorem  tax  upon  all 
taxable  property  sufficient  to  pay  the  interest  and  contribute  to 
a  2  per  cent  sinking  fund  was  authorized.  The  state  pledged 
itself  in  this  act  that  its  bond  subsidies  to  works  of  internal 
improvement  should  not  exceed  $12,000,000.-  An  act  carrying 
a  subsidy  of  $6,000,000  in  8  per  cent,  thirty-year  bonds  to  a 
road  that  should  cross  the  state  from  east  to  west  and  reach  the 
Pacific  Ocean  was  opposed  by  the  governor,  and  it  was  only 
when  the  bill  had  passed  the  legislature  after  two  vetoes  that  he 
withdrew  his  opposition.^  A  bill  that  proposed  to  subsidize  the 
East  Line  and  Red  River  Railroad  Company  with  7  per  cent 
bonds  to  the  amount  of  $30,000  a  mile  was  effectively  vetoed.* 
It  was  provided  in  the  act  chartering  and  subsidizing  the  Pacific 
road  that  when  the  state  should  have  power  under  the  consti- 
tution to  grant  lands  in  aid  of  internal  improvements,  a  land 
grant  should  be  substituted  for  the  bond  subsidy,  and  this  sub- 
stitution was  made  in  1873,  following  the  adoption  of  an  amend- 
ment to  the  constitution  authorizing  land  donations.  Bonds  of 
the  subsidy  to  the  International  road  were  signed  by  the  gov- 
ernor, but  when  presented  to  the  comptroller  to  be  countersigned 
and  registered,,  that  officer  refused.  The  company  thereupon 
brought  suit  to  compel  the  signature  of  the  comptroller,  but  the 
supreme  court  of  the  state  reversed  the  judgment  of  the  district 
court  awarding  a  peremptory  mandamus  and  dismissed  the  ease 


'Report  of  Committee  on  Judiciary;  House  Journal,  11th  Leg.,  p.  733. 
-Act   of   August    5,    1870,    section   10;    Special   Laws   of   1870,  Called 
Sess.,  p.  109. 

==House  Journal,  12th  Leg.,  p.  1688. 
*House  Journal,  12th  Leg.,  p.  881. 


164  Bulletin  of  tJie  TJniversity  of  Texas 

on  the  ground  that  the  judicial  department  of  the  government 
had  no  authority  to  interfere  with  the  executive  department  in 
the  performance  of  duties  not  ministerial  in  character.^  Un- 
blushing bribery  Avas  charged  in  connection  with  the  passage  of 
this  International  subsidy,  and  though  the  jury  of  a  district 
court  found  the  allegation  of  fraud  to  be  untrue,  the  charges 
were  so  rife  and  upon  such  high  authority  as  to  give  them 
credence.^  It  was  a  cause  of  wonder  at  the  time  that  members 
of  the  Twelfth  Legislature  whose  income  was  their  per  diem 
should  at  the  end  of  the  session  be  able  to  buy  fine  horses  and 
furniture  and  to  travel  north.^ 

Except  for  the  increase  in  salaries  under  the  Throckmorton 
government  and  the  wastefulness  of  the  constitutional  conven- 
tion of  1868,  the  expenditures  to  1870  were  not  excessive.  This 
is  not  true,  however,  for  the  period  of  the  Reconstruction  there- 
after. Expenditures  then  were  beyond  the  ability  of  the  state, 
and  the  best  evidence  thereof  is  that,  despite  heavy  taxation, 
bonds  were  sold  to  pay  current  expenses  and  a  large  floating 
debt  was  accumulated.  The  Twelfth  Legislature  exhibited  such 
a  degree  of  profligacy  and  open  disregard  of  the  state's  eco- 
nomic condition  that  it  is  notorious.  Matters  might  have  been 
worse,  though,  and  that  they  were  not  so  was  due  mainly  to 
the  integrity  of  the  governor  in  the  administration  of  the  public 
finances.* 


'Bledsoe  v.  the  International  Railroad  Company,  40  Tex.,  537   (1874). 

-Bledsoe  v.  the  International  Railroad  Company,  40  Tex.,  537.  Mes- 
sage of  Governor  Coke,  January  12,  1875.  The  San  Antonio  Daily 
Herald,  October  4  and  20,  and  November  24,  1870.  The  Houston  Daily 
Telegraph,  February  23  and  October  19,  1871. 

^Clippings  from  the  State  Gazette  and  Flake's  Bulletin  in  the  San 
Antonio  Daily  Herald,  September  27  and  October  20,  1870. 

*Ramsdell,  Reconstruction  in  Texas,  p.  318. 


Chapter  3. 


RECEIPTS. 


A.     Tlie  Property  Tax. 

The  chief  source  of  receipts  during  this  period  was  taxation, 
and  the  main  tax  was,  as  in  previous  periods,  the  ad  valorem 
tax  upon  real  and  personal  property.  The  work  of  assessment 
and  collection  was  performed  until  1870  by  an  assessor  and 
collector,  but  thereafter  assessment  was  by  the  justices  of  the 
peace,  and  collection  by  the  sheriff  of  each  county.  Under  the 
provisional  governments  assessment  and  collection  were  subject 
to  special  difficulties.  The  war  had  disorganized  the  machinery 
of  administration,  and  in  many  of  the  counties  it  was  impos- 
sible, owing  to  the  opposition  of  the  people  to  military  author- 
ity, to  secure  an  assessor  and  collector.  In  1868,  for  example, 
thirty-nine  counties  out  of  one  hundred  and  twenty-five  had 
vacancies  in  the  office.  It  was  not  infrequent,  too,  that  those 
who  qualified  were  inexperienced,  inefficient,  or  corrupt.^  De- 
spite these  difficulties,  however,  receipts  from  taxes  before  1870 
were,  proportionately  to  the  rate  and  the  total  assessments, 
more  satisfactory  than  after  1870.  This  better  showing  was 
due,  in  the  first  place,  to  the  more  rigid  collection  under  the 
military  authorities,  and,  in  the  second  place,  to  less  burden- 
some rates.^  A  number  of  circumstances  contributed  to  the 
disarrangement  of  the  tax  system  during  this  period.  With 
the  emancipation  of  the  slaves,  who  were  assessed  for  taxation 
in  1865  at  $137,191,886,  taxable  property  to  that  amount  was 
wiped  out.  Slaves  in  1865  constituted  38  per  cent  of  the  taxable 
property.  The  escape  and  undervaluation  of  real  estate  was 
favored  by  the  provision  of  the  laws  which  permitted  its  ren- 
dition either  in  the  county  of  its  situs  or  in  the  county  of  resi- 
dence of  the  owner   or    agent.     Furthermore,   because   of  the 


^Report  of  the  Comptroller,  1868-9,  p.  4.  In  1870  defaulting  and 
delinquent  officers  were  due  the  state  $350,000;   ibid.,  1870,  p.  20. 

=^The  United  States  Census  of  1870  gave  as  the  assessed  value  of 
property  $149,732,929  and  as  the  true  value  $159,052,542.  The  per  cent 
of  assessed  to  the  true  value  was  87,  which  is  a  high  proportion.  Vol. 
Industry  and  Wealth,  p.  10. 


166  Bulletin  of  tlie  University  of  Texas 

seeming  impossibility  for  assessors  and  collectors  to  comply 
strictly  with  all  the  details  of  the  laws  regarding  sale  for  taxes, 
the  courts  would  not  sustain  titles  to  property  purchased  at 
tax  sales.  For  this  reason  taxpayers  no  longer  feared  forced 
sales.^  Further,  the  tax  year  ended  December  1,  which  re- 
sulted in  the  collection  of  taxes  during  the  summer  or  fall,  or 
the  seasons  of  greatest  scarcity  of  money  for  the  farmers.^ 
Back  taxes  piled  up  as  a  consequence  of  these  circumstances, 
and  strenuous  efforts  were  made  to  collect  them.  The  act  of 
November  12,  1866,  required  the  compilation  of  a  list  of  all 
lands  on  which  taxes  were  due  from  1849  to  1866,  and  provided 
for  their  sale.    In  1865  and  1866  791,000  acres,  and  in  1867  and 

1868  the  unprecedented  number  of  7,800,000  acres,  were  sold 
to  the  state  for  unpaid  taxes.^  This  act  was  later  nullified,  and 
the  attempt  was  again  made  in  1870  to  collect  back  taxes,  but 
failed  because  of  the  governor's  veto  of  the  appropriation  to 
carry  it  out.*  Subsequent  attempts  were  of  the  nature  of  com- 
mutation for  all  unpaid  amounts  by  payment  of  three  or  five 
times  the  amount  of  the  current  taxes.     The  Constitution  of 

1869  was  the  first  Texas  constitution  to  provide  that  the  home- 
stead should  not  be  sold  for  taxes  except  for  taxes  due  thereon. ** 

The  feature  of  taxation  under  radical  rule  which  more  than 
any  other  explains  the  ill-working  of  the  tax  system  is  that 
state  and  local  taxes  together  constituted  too  great  a  burden. 
In  1865  the  state  ad  valorem  rate  was  12^2  cents  on  the  $100 
valuation ;  in  1866  and  1867,  20  cents ;  in  1868,  1869,  and  1870, 
15  cents;  in  1871,  1872,  1873,  and  1874,  50  cents.  In  1868  there 
was,  in  addition  to  the  regular  tax  of  15  cents,  a  special  tax 
of  20  cents  to  pay  the  expenses  of  the  constitutional  convention. 
In  1868  the  state  and  county  ad  valorem  taxes  amounted  in 
Bexar  County,  for  example,  to  $1.10  on  the  $100  valuation,  and 
in  1870,  to  $1,121/^.    Besides  these  there  were  state  and  county 


^Report  of  the  Acting-Provisional  Comptroller,  1866.     Report  of  the 
Comptroller,  1868-9,  p.  7.     Message  of  Governor  Coke,  April   19,  1876. 
-Report  of  the  Comptroller,  1874,  p.  3. 
•■'Report  of  the  Comptroller,  1868-9,  p.  110. 
^Message  of  Governor  Davis,  January  10,  1871. 
»Art.  12,  sec.  15. 


A  Financial  History  of  Texas  167 

income,  salary,  poll,  and  occupation  taxes,  and  city  taxes.^  In 
1871  combined  state  and  county  ad  valorem  rates  amounted 
at  a  conservative  estimate  to  $2,175,  and  there  were  besides  the 
state  and  county  poll  and  occupation  taxes,  and  city  taxes.^ 
In  1869  collected  state  and  local  taxes  of  all  kinds  aggregated 
$1,129,577 ;  in  1872  assessed  state  and  county  ad  valorem  and 
occupation  taxes  and  local  taxes  for  public  schools  amounted 
to  $4,584,275.^  All  of  our  statistics  indicate  an  increase  in 
taxation  that  was  enormous.  Assuming  10  per  cent  as  a  low 
average  rate  of  interest  on  loanable  capital,  state  and  county 
taxes  of  $2.17  would  be  equivalent  to  an  income  tax  of  21  per 
.cent.  No  government  would  dare  to  levy  an  income  tax  at 
such  a  figure,  and  it  should  be  no  surprise  that  the  imposition 
of  this  rate  indirectly  through  the  property  tax  occasioned 
bitter  complaint  and  led  to  the  undervaluation  and  escape  of 
property.  Conventions  of  taxpayers  were  held  in  a  number  of 
counties,  and  as  a  culminating  protest  a  convention  of  the  tax- 
payers of  the  state  was  held  in  Austin  on  September  22,  23  and 
25,  1871,  with  two  hundred  and  seventeen  delegates  present 
representing  ninety-four  counties.*  This  convention  was  called, 
by  the  radicals,  /*a  body  of  sulks  and  soreheads,"  but  these 
epithets  ill  app/ly  to  ex-governors  Throckmorton,  Pease  and 
Hamilton  and  to  the  other  leading  men  who  were  delegates." 

In  estimating  the  weight  of  taxation  upon  the  people  of  the 
state  during  this  period  certain  Federal  taxes  need  to  be  con- 
sidered. The  sum  of  the  direct  tax  of  1861  apportioned  to 
Texas  was  $355,106.66.  By  an  ordinance  of  the  convention  of 
1866,  the  state  assumed  the  payment  of  this  tax,  and  the  comp- 


^The  San  Antonio  Daily  Herald,  April  9,  1868,  November  18,  22,  26^ 
and  December  22,  1870. 

'Proceedings  of  the  Taxpayers'  Convention,  Austin,  1871,  p.  22.  .  See 
also  Clegg  V.  the  State,  42  Tex.,  605   (1875). 

^In  1869  state  taxes  were  $589,363,  county  taxes,  $312,335,  and  town^ 
city  and  other  taxes,  $227,879;  Census  of  1870.  Vol.  Industry  and 
Wealth,  p.  58.  Message  of  Governor  Davis,  January  14,  1873. 

^Proceedings  of  the  Taxpayers'  Convention,  Austin,  1871,  pp.  5-8.  The 
Houston  Daily  Telegraph,  August  13,  25,  September  5,  8,  19,  20,  1871. 
The  San  Antonio  Daily  Herald,  September  26  and  27,  1871.  The  Austin 
Democratic  Statesman,  September  23  and  26,  1871. 

*The  Austin  Daily  Journal,  September  21,  1871,  et  passim. 


168  Bulletin  of  tlie  University  of  Texas 

troller  was  authorized  to  effect  settlement  if  possible  by  setting 
off  against  the  amount  due  the  amount  owed  Texas  by  the 
national  government  on  account  of  advances  by  the  state  for 
frontier  defence,  unpaid  bonds  of  the  United  States  held  by  the 
state,  etc.^  Nothing  came  of  this,  and  by  an  act  of  November 
13,  1866,  the  governor  was  authorized  to  have  assessed  and 
collected  upon  all  real  property  a  tax  of  28  cents  on  each  $100 
of  value  of  such  property  rendered  for  the  year  1861,  and  any 
deficiency  was  to  be  made  up  from  the  state  revenue  account.^ 
Nothing  came  of  this  measure  either,  however,  and  all  that  was 
collected  of  the  tax  was  that  effected  by  the  United  States 
internal  revenue  agents  in  1865  and  1866.  Up  to  the  time  of 
the  suspension  of  collection  by  the  act  of  Congress  of  July  28, 
1866,  there  was  credited  to  Texas  $180,841.51,  leaving  the 
amount  uncollected  $174,265.16." 

More  burdensome  than  the  direct  tax  was  the  Federal  tax 
upon  cotton  which  was  levied  from  1864  to  1867.  It  Avas  2  and 
3  cents  a  pound  and  its  collection  was  rigidly  enforced.  The 
total  paid  by  Texas  was  $5,502,401.* 

B.     Income  and  Salary  Taxes. 

The  income  tax  levied  during  the  war  was  not  an  income  tax 
in  the  strict  sense  of  the  term,  but  was  really  an  occupation 
tax.  Governor  Throckmorton  recommended  certain  changes  in 
it,  the  chief  ones  being  that  the  rates  should  be  graduated  and 
that  there  should  be  an  exemption.^  His  suggestions  were 
carried  out  in  the  act  of  November  6,  1866.^    This  act  provided 


^Laws  of  1866,  }3.  37. 

^Laws  of  1866,  p.  257. 

^House  Executive  Document,  No.  159,  Forty-ninth  Congress,  Second 
:Session.  Dunbar,  "The  Direct  Tax  of  1861,"  in  Quarterly  Journal  of 
Economics,  vol.  3,  pp.  450,  453.  The  Southern  Intelligencer,  May  10 
and  June  7,  1866.  By  the  act  of  Congress  of  March  2,  1891,  refunding 
the  direct  tax,  Texas  received  $180,886.72.  This  amount  was  held  in 
trust  for,  and  distributed  to,  those  who  paid  or  their  heirs,  until  March 
2,  1897,  when  the  balance  of  $66,197.89  reverted  to  the  general  treasury 
tof  the  state. 

^51st  Cong.  First  Sess.,  House  Report,  No.  683. 

^House   Journal,   11th  Leg.,  Reg.   Sess.,  p.   79. 

■•Laws  of  1866,  p.  91. 


A  Financial  History  of  Texas  1 69 

that  there  should  "be  levied  on  and  collected  from  every  person, 
firm,  corporation,  or  association,  doing  business  within  this 
state,  at  any  time  during  the  year  1866,  and  in  every  year  there- 
after, an  annual  income  tax,  as  follows:  on  the  first  $1000  of 
net  taxable  income,  a  tax  of  1  per  cent;  on  the  second,  a  tax 
of  1^/^  per  cent ;  on  the  third,  fourth,  and  fifth,  a  tax  of  2  per 
cent;  and  on  all  taxable  income  above  $5000,  a  tax  of  3  per 
cent." 

This  tax  was  known  as  the  "incojne  tax."  It  was  provided 
also  "that  upon  the  salaries  of  all  salaried  persons,  serving  in 
any  capacity  whatever,  except  upon  persons  in  the  army  or 
^navy  of  the  United  States,  or  those  whose  salaries  are  $600  or 
less  per  annum,  an  annual  tax  of  one-half  of  1  per  cent  on  all 
sums  over  $600  so  received"  should  be  levied.  This  tax  was 
known  as  the  "salary  tax." 

In  the  assessment  of  the  income  tax  the  sworn  schedule  pro- 
vided for  a  statement  of  the  gross  income  and  the  deductions 
therefrom.  The  following  deductions  were  allowed:  from  all 
incomes,  when  returned  by  heads  of  families,  $600;  losses  on 
real  estate,  if  purchased  within  the  year;  interest,  taxes; 
amount  actually  paid  for  rent  of  homestead;  and  salaries.  In 
addition  to  these,  rent,  insurance,  and  other  expenses  were 
allowed  to  be  deducted  from  the  profits  of  trade ;  from  the  rent 
of  land,  the  average  annual  outlay  for  the  repair  of  fences  was 
deductible ;  and  from  the  rent  of  buildings,  actual  repairs,  not 
to  exceed  10  per  cent  of  the  rent  and  insurance  paid  by  the 
owner;  from  farming  operations,  the  amounts  paid  for  labor, 
repairs,  live  stock  bought  and  sold  during  the  year,  insurance, 
and  interest  on  any  incumbrance  upon  the  farm.^ 

It  is  to  be  noted  in  regard  to  the  assessment  of  the  income 
tax  that  no  use  whatever  was  made  of  the  principle  of  stoppage 
at  the  source.     The  salary  tax  also  was  self-assessed. 

The  income  and  salary  taxes  were  in  operation  four  years, 
or  from  1867  to  1870.  The  returns,  and  especially  those  of  the 
salary  tax,  were  small.  The  law  was  poorly  drawn  and  laxly 
administered,  and  evasion  was  wholesale.  In  1867  no  incomes 
were  assessed  in  forty-two  and  no  salaries  in  one  hundred  and 


^Act  of   November  10,    1866;    Laws   of   1866,   p.   140.     See   Millar  v. 
Douglas,  42  Tex..  288    (1875). 


170  Bulletin  of  tlie  University  of  Texas 

one  out  of  one  hundred  and  thirty-three  counties;  in  1868  no 
incomes  were  assessed  in  sixty-one  out  of  one  hundred  and 
thirty-six  counties,  and  no  salaries  in  one  hundred  and  fifteen 
counties.^ 

C.     Business  Taxes. 

The  business  taxes  levied  during  this  period  were  the  cus- 
tomary specific  occupation  taxes,  the  income  tax  as  described 
above,  and  the  special  tax  upon  the  receipts  of  railroad,  tele- 
graph and  insurance  companies.  The  occupation  tax  embraced 
a  widening  range  of  vocations  as  time  went  on,  and  especially 
after  the  discontinuance  of  the  income  tax  in  1870.  It  is 
interesting  to  note  that  in  1866  an  ad  valorem  tax  on  money 
loaned  and  on  merchandise  higher  than  the  general  ad  valorem 
tax  was  levied  under  the  guise  of  an  occupation  tax.  This 
feature,  which  was  observable  in  ante-bellum  taxation  and  rep- 
resented a  spirit  of  hostility  to  money  lenders  and  merchants, 
does  not  reappear  in  subsequent  acts.  The  occupation  taxes 
were  frequently  changed,  and  those  upon  the  retail  liquor  busi- 
ness particularly  showed  violent  fluctuations.  There  were  de- 
fects in  the  laws  levying  them  and  laxity  of  administration, 
especially  in  the  matter  of  light  penalties  for  non-payment  and 
of  the   absence  of  checks  upon  collections. - 

This  period  is  important  in  the  history  of  corporation  taxation 
by  the  state  for  the  attempt  to  make  use  of  special  corporation 
taxes.  Until  1870  the  method  of  taxing  corporations  was  by  the 
property  tax  and  the  income  tax.  In  1870  there  was  levied,  in 
addition  to  the  general  property  tax,  an  annual  tax  of  tv\"0  per 
cent  upon  the  gross  receipts  of  railroad,  insurance,  and  telegraph 
companies.'^  In  1871  this  was  changed,  and  railroad  and  tele- 
graph companies  became  subject  to  a  tax  of  one  per  cent  upon  net 
receipts,  life  insurance  companies  to  an  annual  occupation  tax  of 


^Report  of  the  Comptroller,  1868-9.  Income  tax  assessed  in  1867, 
$38,892;  salary  tax  assessed  in  1867,  $1,186;  ad  valorem  and  poll  taxes 
assessed  in  1867,  $354,418;  income  tax  assessed  in  1868,  $14,600;  salary 
tax  assessed  in  1868,  $1,086;  ad  valorem  and  poll  taxes  assessed  in  1868, 
$310,626;  per  cent  of  income  and  salary  taxes  to  total  assessed  taxes  in 
1867,  10;   in  1868,  4.8. 

^Report  of  the  Comptroller,  1874,  p.  56. 

^Laws  of   1870,  Called  Sess.,  pp.  199,  216. 


I 


A  Financial  History  of  Texas  171 

$500,  fire  and  marine  insurance  companies  to  one  of  $250.^  A 
few  days  later  a  tax  of  one  per  cent  upon  gross  receipts  was  sub- 
stituted for  the  one  per  cent  tax  upon  net  receipts.  This  com- 
bined use  of  the  property  and  the  receipts  tax  was  thought  to 
operate  unfairly  upon  railroads  as  compared  with  telegraph  com- 
panies because  of  the  greater  amount  of  tangible  property  owned 
by  the  railroads,  and  an  increase  in  the  tax  upon  telegraph  com- 
panies to  five  per  cent  of  their  gross  receipts  was  suggested.^ 
The  legislature,  however,  passed  a  bill  which  relieved  railroads 
of  taxation  by  the  property  tax,  but  it  was  vetoed  by  the  governor 
on  the  ground  that  since  the  counties  were  not  allowed  to  tax  the 
receipts  of  railroads,  fairness  required  that  the  ad  valorem  tax 
should  not  be  remitted.'^  The  result  of  this  difference  of  opinion 
between  the  governor  and  legislature  was  the  repeal  of  the  re- 
ceipts tax,  leaving  only  the  ad  valorem  property  tax  applicable.* 
Corporations  got  off  with  comparatively  light  taxation,  and  for 
the  first  time  in  the  state 's  tax  history  there  appeared  complaints 
of  the  working  of  the  property  tax  as  applied  to  corporations.^ 

D.     The  Poll  Tax. 

A  poll  tax  of  $1  was  levied  throughout  the  Reconstruction 
period.  Until  1871  it  applied  to  all  males  over  twenty-one  years 
of  age,  thereafter  to  those  between  twenty-one  and  sixty  years, 
with  the  usual  exceptions  of  Indians  and  persons  7ion  compos 
mentis.  The  tax  of  1871  and  thereafter  was  for  the  benefit  of 
the  public  schools.  The  penalty  for  failure  to  pay  this  tax  was 
that  the  person  failing  should  not  receive  any  money  due  him 
from  the  state  or  the  county  until  the  tax  with  interest  had  been 
paid.  That  there  was  considerable  evasion  of  the  tax  may  be 
inferred  from  the  fact  that  whereas  the  census  of  1870  reported 
the  number  of  males  twenty-one  years  of  age  and  upward  at 
169,258,  the  number  assessed  for  the  poll  tax  in  1869  was  only 
95,895.« 


^Laws  of  1871,  First  Sess.,  pp.  47,  60. 

-Message  of  Governor  Davis,  April  24,  1871. 

'Message  of  Governor  Davis,  November  28,  1871. 

*Act  of  December  1,  1871;   Laws  of  1871,  Adj.  Sess.,  p.  55. 

•'Message  of  Governor  Davis,  .January  14,  1873. 

^Census  of  1870,  vol.  1,  p.  619.     Report  of  the  Comptroller,  1870,  p.  85. 


172  Bulletin  of  tlie  University  of  Texas 

E.     Other  Receipts. 

Next  to  taxation  the  chief  source  of  receipts  was  the  sale  and 
hypothecation  of  bonds.  The  attempt  was  made  during  the 
Throckmorton  administration  to  issue  frontier  defence  bonds,  but 
it  was  unsuccessful.  Upon  the  establishment  of  the  Davis  ad- 
ministration, however,  the  issue  and  sale  of  bonds  began.  Ke- 
ceipts  from  sale  and  hypothecation  during  the  four  years  1871-4 
amounted  to  $1,406,650.60  as  compared  with  $3,900,766  derived 
from  taxation. 

Receipts  from  the  sale  of  land  were  neglibly  small  on  account 
of  the  policy  of  giving  away  the  public  domain  to  actual  settlers. 
Heads  of  families  without  a  homestead  were  entitled  to  one  hun- 
dred and  sixty,  single  men  to  eighty,  acres.^  The  conditions 
attached  to  the  gift  were  three  years'  residence  upon  the  land 
and  payment  of  the  land  office  fees.  The  old  policy  of  pre-emp- 
tion was  continued  by  the  act  of  August  12,  1870,  which  provided 
that  any  actual  settler  in  good  faith  upon  the  vacant  public  do- 
main could  purchase  not  exceeding  one  hundred  and  sixty  acres 
at  $1  per  acre.  Previous  to  the  Constitution  of  1869  and  after 
the  adoption  of  the  constitutional  amendment  of  1873  grants  also 
were  made  to  railroads,  and  nine  of  the  roads  chartered  during 
1873  and  1874  received  grants.  School  lands  and  certain  other 
lands  were  reserved  from  location  by  settlers  or  railroads,  but 
only  a  small  amount  of  them  was  sold,  and  that  during  the 
early  part  of  the  period.  One  of  the  merits  of  the  Reconstruc- 
tion governments  is  that  the  school,  university,  and  asylum  lands 
were  not  suffered  to  be  spoliated.  No  provision  for  their  sale 
was  really  made  until  1874.  ,  The  Constitution  of  1869  prohibited 
the  sale  of  certificates  at  the  land  office,  except  to  actual  settlers, 
in  excess  of  one  hundred  and  sixty  acres. ^ 


^Laws  of  1866,  p.  203.     Constitution  of  1869,  art.  10,  sec.  8.     Laws  of 

1870,  Called   Sess.,  p.  69.     Laws  of  1871,  First  Sess.,  p.  16.     Laws  of 

1871,  First  Sess.,  p.  93.    Laws  of  1873,  p.  101. 
''Art.  5,  sec.  6. 


Chapter  4. 

educational  funds. 

A.     The  School  Fund, 

At  the  beginning  of  this  period  the  assets  to  the  credit  of  the 
school  fund  were  $1,753,317  of  6  per  cent  railroad  bonds,  $320,- 
367.13  of  6  per  cent  state  bonds,  and  $19,474  in  state  warrants. 

TJie  amended  Constitution  of  1866  reserved  to  the  school  fund 
its  former  endowments  of  securities  and  lands,  but  it  did  not  pro- 
vide, as  had  the  old  constitution,  that  a  part  of  the  annual  revenue 
of  the  state  derived  from  taxation  should  belong  to  the  fund.  As 
a  result,  the  receipts  during  the  five  years  1866-1870  were  from 
lands  and  railroad  bonds  only  and  were  insignificant  in  amount. 
The  Constitution  of  1869  made  some  important  changes.  Endow- 
ments theretofore  made  were  confirmed,  and  all  of  the  proceeds 
of  the  public  domain,  one-fourth  of  the  annual  revenue  from  tax- 
ation, and  a  poll  tax  of  $1  were  granted.  By  the  act  of  August  13, 
1870,  the  present  division  of  the  school  funds  into  a  permanent 
fund  and  an  available  fund  was  made.  Under  the  new  tax  pro- 
visions a  total  of  $1,053,625  was  received  by  the  available  fund 
during  the  four  years  1871-1874.  Apportionment,  which  had  been 
suspended  since  the  war,  was  begun  in  1872,  the  per  capita  vary- 
ing between  $1.81  and  $1.95.  As  there  was  little  local  taxation  to 
supplement  the  state  apportioned  funds,  the  school  facilities  af- 
forded were  meager,  but  any  facilities  at  all  represented  a  step, 
forward.  Such  opposition  as  was  expressed  to  taxation  for  schools 
was  not  against  the  state  taxes  but  against  the  taxes  which  the 
county  or  school  districts  were  empowered  to  levy.  Most  strongly 
protested  was  the  1  per  cent  ad  valorem  tax  which  the  directors  of 
each  school  district  could,  by  the  act  of  April  17,  1871,  levy  for 
the  purpose  of  building  schoolhouses  and  maintaining  schools.^ 

A  question  which  came  up  for  consideration  during  this  period, 
and  which  was  of  great  importance  to  the  school  fund,  was  the 
adjustment  of  the  indebtedness  of  the  railroad  companies  to  the 


^Proceedings  of  the  Taxpayers'  Convention,  Austin,  1871,  pp.  22  and 
27.  Kinney  v.  Zimpleman,  36  Tex.,  554  (1872).  See  also  Clegg  v. 
the   State,   42   Tex.,    605    (1875). 


174  Bulletin  of  tJie  University  of  Texas 

fund.  The  act  of  November  10,  1866,  gave  the  companies  the 
privilege  of  paying  the  interest  due  in  installments,  the  last  pay- 
ment to  be  made  June  1, 1870.  During  1867  and  1868,  $60,871.73 
was  paid.  On  March  1,  1868,  the  companies  owed  $450,140.08 
on  account  of  accrued  interest,  and  $1,753,317  as  principal,  or  a 
total  of  $2,203,457.08.1  The  Reconstruction  Convention  of  1868-9 
was  disposed  not  to  be  lenient  with  the  companies.  It  granted 
relief  to  the  Houston  and  Texas  Central,  to  which  was  joined 
the  Washington  County  Railroad,  and  to  the  Southern  Pacific, 
but  the  Houston  Tap  and  Brazoria,  and  the  Texas  and  New 
Orleans  were  ordered  sold.^  Relief  was  extended  to  all  the  roads 
by  the  act  of  August  13,  1870,  permitting  payment  of  interest 
and  in  addition  1  per  cent  toward  a  sinking  fund  every  six 
months.  Past  interest  due  to  May  1,  1870,  was  charged  as  prin- 
cipal, and  the  total  amount  in  state  warrants  in  1864  and  1865 
was  $979,069.86.  The  only  road  sold  for  failure  to  accept  these 
provisions  was  the  Houston  Tap  and  Brazoria.  The  amount  ob- 
tained from  this  sale  was  $130,000.''  As  a  result  of  this  default 
and  forced  sale  the  school  fund  lost  the  sum  of  $165,800  principal 
and  $178,970  interest.*  The  Houston  and  Texas  Central  and  the 
Southern  Pacific  were  authorized  to  exchange  for  their  indebted- 
ness new  7  per  cent  bonds,  and  the  Central  was  further  favored 
by  having  credit  allowed  it  for  the  sums  paid  for  interest  in 
treasury  warrants  during  the  fiscal  years  1864  and  1865.^  The 
comptroller,  however,  upon  the  advice  of  the  attorney  general, 
refused  to  allow  credit  to  the  Houston  and  Texas  Central  for  the 
payments  made  in  warrants  in  1864  and  1865,  and  the  exchange 
of  bonds  was  never  made.^  The  validity  of  the  payments  in 
state  warrants  during  the  war  was  subsequently  legally  contested, 
however,  and  was  settled  in  favor  of  the  railroads."^  Interest 
payments  were  resumed  by  the  companies  in  1870,  but  the  ex- 
perience was  responsible  for  the  constitutional  provision   that 

^Report  of  the  Comptroller,  1868-9. 

^Ordinances  of  the  Constitutional  Convention,  1868,  pp.  46,  77,  35,  36. 
^'Report  of  the  Comptroller,   1871. 
^Report  of  the  Comptroller,  1891,  p.  XIX. 

^Ordinances  of  the  Constitutional  Convention,  1868,  pp.  46,  47.     Laws 
of  1870,  Called  Sess.,  p.  325. 

^Message  of  Governor  Roberts,  January  11,  1881. 

^H.  &  T.  C.  R.  R.  Co.  V.  Texas,  177  U.  S.,  66-103    (1899). 


A  Financial  History  of  Texas        .  175 

future  investments  of  the  school  fund  should  be  in  United  States 
bonds. 

In  1868  $82,168.82  in  5  per  cent  state  bonds  appeared  among 
the  assets  of  the  permanent  school  fund.  These  bonds  replaced 
that  amount  of  cash  which  was  derived  from  the  payment  of 
United  States  bonds  belonging  to  the  fund  and  which  had  been 
used  by  the  state  government.  They  were  regarded  as  a  valid 
debt  of  the  state,  but  no  interest  was  paid  on  them.  The  6  per 
cent  bonds  amounting  to  $320,367.13,  which  were  executed  to  the 
scbpol  fund  during  the  war  in  exchange  for  state  treasury  war- 
rants received  from  railroads  in  payment  of  the  interest  and 
principal  of  their  indebtedness,  were  not  recognized  as  a  valid 
debt  during  this  period.^ 

B.  University  Fund. 

The  university  fund  had  been  depleted  of  its  assets  by  the 
legislation  of  1860  and  was  possessed  of  nothing  at  the  beginning 
of  this  period  except  some  state  warrants  and  a  comptroller's 
certificate  of  indebtedness,  both  of  which  were  of  doubtful  val- 
idity. 

The  Constitution  of  1866  reserved  to  university  purposes  the 
previous  grant,  but  the  Constitution  of  1869  made  no  reference 
whatever  to  the  subject.  The  act  of  November  12,  1866,  provided 
for  the  issue  to  the  fund  of  $134,472.26  of  5  per  cent  state  bonds 
to  replace  the  United  States  bonds  and  interest  on  same  w^hich 
were  appropriated  in  1860.  No  interest  was  paid  on  this  debt, 
however,  during  this  period.  Measures  were  passed  in  1870  and 
1871  authorizing  the  sale  of  the  university  lands,  but  they  were 
vetoed  by  Covernor  Davis  on  the  ground  that  there  existed  no 
necessity  for  sacrificing  these  lands.-  The  act  of  April  8,  1874, 
provided  for  the  sale  of  the  lands,  however,  and  the  receipts 
under  this  act  are  the  only  ones  accruing  to  the  fund  from  any 
source  during  the  Reconstruction  period. 

C.  Agricultural  and  Mechanical  College. 

By  the  act  of  Congress  of  1862  and  the  supplementary  act  of 
1866,  Texas  received  from  the  United  States  land  scrip  for  180,000 

^Message  of  Governor  Davis,  August  6,  1870. 
=Veto  message  of  May  29,  1871. 


176  .  Bulletin  of  tlie  University  of  Texas 

acres  for  the  purpose  of  establishing  an  agricultural  and  mechan- 
ical college.  This  scrip  was  sold  in  1871  at  87  cents  an  acre,  the 
amount  realized  being  $156,600.  This  was  quite  as  well  as  other 
states  did  in  the  sale  of  their  scrip,  but  representing  as  it  did 
some  of  the  best  land  of  the  national  domain,  it  was  unfortunate 
that  it  could  not  have  been  held  for  sale  until  a  later  date.^  The 
proceeds  were  invested  in  $174,000  7  per  cent  frontier  defence 
bonds  of  the  state  and  in  $12,000  10  per  cent  bonds  of  Brazos 
County ;  $12,000  of  the  proceeds  was  drawn  under  the  pretence 
that  it  was  necessary  to  purchase  the  lands  required  for  the  loca- 
tion of  the  college,  but  the  money  was  loaned  and  the  comptroller 
held  unpaid  notes  for  it ;  $21,096  also  was  expended  for  a  worth- 
less foundation  for  the  main  buildino:." 


^The  San  Antonio  Daily  Herald,  April  14,  1871. 
^House  Journal,   14th  Leg.,  p.  119. 


Chapter  5. 


PUBLIC  DEBT. 


The  first  official  statement  of  the  debt  incurred  during  the  war 
was  made  in  October,  1865.  A.  J.  Hamilton  was  appointed  pro- 
visional governor  of  Texas  by  President  Johnson  on  Januarj'-  17,. 
1865,  and  ex-Governor  Pease  and  Swante  Palm  were  appointed  by 
the  provisional  governor  to  report  on  the  finances  of  the  state 
since  secession.  Their  report  was  made  under  date  of  October 
30,  1865.^  The  following  analysis  of  the  debt  is  based  on  their 
report  and  on  the  state  statutes: 

Item  I.  8  per  cent  state  bonds.  Authorized  by  the 
act  of  March  20,  1861,  entitled  ''An  Act  to  pro- 
vide for  the  funding  of  the  debt  contracted  for  the 
protection  of  the  frontier- $     16,000.00 

Item  II.  8  per  cent  state  bonds.  Authorized  by 
the  act  of  April  8,  1861,  entitled  ''An  Act  au- 
thorizing a  loan  and  imposing  a  specific  tax  to 
meet   the  principal   and   interest   thereof"^ $  899,000.00^ 

Item  III.  7  per  cent  state  bonds.  Authorized  by 
the  act  of  December  10,  1863,  entitled  "An  Act 
to  raise  two  millions  of  dollars,  or  so  much 
thereof  as  may  be  necessary,  by  the  sale  of  cotton 
bonds,  to  provide  for  the  defence  of  the  State  and 
to  repel  invasion,  and  for  the  purchase  of  ma- 
chinery   for   manufacturing   purposes"^ 211,130.8? 

'Executive  Record  No.  281.  The  report  is  abridged  and  printed  as 
an  appendix  to  the  House  Journal,  1866. 

=Laws  of  1861,  Called  Sess.,  p.  24.  Repealing  act  of  January  11,  1862; 
Laws  of  1862,  p.  44. 

'Laws  of  1861,  p.  30.  Amendatory  act  of  January  11,  1862;  Laws  of 
1862,  p.  40.  Act  of  January  13,  1862;  Laws  of  1862,  p.  40.  Act  of 
March  3,  1863;  Laws  of  1863,  Called  Sess.,  p.  10. 

■'There  were  $917,000  of  these  bonds  issued,  but  $17,000  were  unused 
and  $1,000  mutilated,  leaving  net  amount  $899,000. 

''Laws  of  1863,  p.  9.  Supplementary  act  of  December  16,  1863;  ibid.,, 
p.   29. 

12— H 


178  Bulletin  of  tlie  University  of  Texas 

Item  IV.  Treasury  warrants.  These  were  of  two 
classes,  10  per  cent  interest  warrants  and  non- 
interest  warrants.  The  interest-bearing  warrants 
were  authorized  by  the  act  of  February  14,  1860.^ 
The  amount  of  10  per  cent  interest  warrants  out- 
standing, including  interest,  was  given  to  be 
about 180,000.00 

Non-interest  bearing  warrants  were  authorized  by 
the  act  of  January  10,  1862,^  The  amount  of 
non-interest  warrants  outstanding  was  given 
to  be 1,888,997.90 

Item  V.     Due  soldiers  and  for  supplies.     Amount 

estimated  at 3,150,000.00 

Item  VI.    Due  on  account  of  the  Republic  of  Texas. 

Amount  estimated  at 110,613.23 

Item  VII.  Due  school  fund,  university  fund,  and 
other  special  funds  of  the  treasury  on  account  of 
securities  and  specie  borrowed  by  the  general  fund 
and  on  account  of  treasury  warrants  and  Confed- 
erate notes  received  by  such  funds $1,455,913.86 

Item  VIII.     Unclassified  debt 199,176.76 

Total $8,110,832.58 

An  account  of  the  objects  for  which  the  above  debt  was  in- 
curred is  essential  to  an  understanding  of  later  legislative  action 
on  it.  The  8  per  cent  bonds  of  item  I  were  issued  to  fund  treas- 
ury warrants  on  account  of  liabilities  antedating  March  2,  1861. 
The  8  per  cent  bonds  of  item  II  were  issued  on  account  of  $92,- 
601.67  of  liabilities  incurred  before  March  2,  1861,  and  of  $105,- 
600.38  of  civil  and  $700,797.95  of  military  liabilities  incurred 
after  March  2,  1861.  The  7  per  cent  bonds  of  item  III  were 
issued  on  account  of  military  expenditures  after  March  2,  1861. 
The  outstanding  treasury  warrants  of  item  IV  are  not  classified  as 


'Laws  of  1860,  p.  115.  Repealed  by  act  of  January  10,  1862;  Laws 
of  1862,  p.  34.  See  also  the  funding  act  of  March  20,  1861;  Laws  of 
1861,  p.  24.     And  the  act  of  January  11,  1862;  Laws  of  1862,  p.  44. 

=Laws  of  1862,  p.  34.  The  act  of  January  13,  1862  (Laws  of  1862,  p. 
40)  authorized  funding  in  8  per  cent  loan  bonds.  See  also  act  of  May 
28,  1864;  Laws  of  1864,  First  Called  Sess.,  p.  10. 


i 


A  Fhmncial  History  of  Texas  '      179 

to  use  or  date  of  issue,  but  it  is  stated  that  about  $1,150,000.00 
was  drawn  after  March  2,  1861,  for  the  support  of  soldiers'  fam- 
ilies. The  claims  estimated  under  item  V  were  obviously  of  a 
war  character  and  dated  after  March  2,  1861.  The  amount  of 
item  VI  represented  an  estimate  of  the  unfunded,  non-interest- 
bearing  debt  of  the  Republic  of  Texas.  There  existed  an  appro- 
priation for  the  payment  of  such  of  this  debt  as  had  been  audited.^ 
Of  item  VII,  the  amount  due  the  school  fund  was  $1,137,406.65 
and  was  on  account  of  United  States  bonds,  interest  coupons  and 
specie  transferred  from  that  fund,  and  state  bonds  and  treasury 
warrc"nts  held  by  that  fund.  All  of  the  transactions  occurred 
after  January  28,  1861.  The  amount  due  the  university  fund 
was  $283,514.22,  and  was  on  account  of  United  States  bonds, 
interest  coupons  and  specie  transferred  from  that  fund,  and 
treasury  warrants  and  Confederate  notes  received  by  that  fund. 
Some  of  the  debt  to  this  fund  was  incurred  prior  to  January  28, 
1861.  The  balance  of  item  VII  was  due  special  treasury  accounts, 
such  as  escheated  estates,  county  tax  funds,  etc.,  and  was  incurred 
after  January  28,  1861.  Item  VIII,  or  the  debt  of  miscellaneous 
character,  was  not  described  by  the  investigators. 

The  debt  as  above  described  was,  both  as  to  amount  and  char- 
acter, that  which  confronted  the  delegates  to  the  constitutional 
convention  which  convened  in  Austin  on  February  7,  1866.  This 
convention  was  composed  of  delegates  elected  by  such  citizens  only 
as  had  taken  the  oath  of  amnesty  or  had  received  special  pardon 
from  the  President  of  the  United  States. 

Ordinance  No.  2,  passed  by  this  convention  March  15,  1866, 
declared  all  debts  created  by  the  State  of  Texas  in  the  aid  of  the 
late  war,  directly  or  indirectly,  to  be  null  and  void,  and  forbade 
the  legislature  to  assume  or  make  any  provision  for  the  payment 
of  any  portion  of  the  debts  contracted  or  incurred,  or  warrants 
issued  by  the  state  between  January  28,  1861,  and  August  5, 
1865,  except  warrants  issued  in  payment  of  services  rendered,  or 
liabilities  incurred  before  January  28,  1861.- 

Ordinance  No.  15  of  this  convention  validated  all  the  warrants 
issued  for  the  payment  of  troops  called  into  the  service  of  the  state 


^Report  of  the  Comptroller,  1860-1. 

-Ordinances  of  the  Constitutional  Convention,  1866,  p.  33. 


180  Bulletin  of  tJie  University  of  Texas 

by  Governor  Houston  for  the  protection  of  the  frontier  prioi  to 
March  2,  1861.^ 

Ordinance  No.  12  acknowledged  the  indebtedness  of  the  state 
to  the  school  fund  for  only  the  United  States  bonds  and  interest 
coupons  transferred  from  that  fund  and  which  were  then  in  pos- 
session of  the  state  or  which  mio'ht  be  recovered  by  the  state.  It 
also  acknowledged  the  indebtedness  of  the  state  to  the  university 
fund  for  the  United  States  bonds  and  interest  coupons  transferred 
from  that  fund  in  February,  1860.  It  directed  that  the  legisla- 
ture should  issue  state  bonds  to  these  funds  for  this  indebtedness, 
and  it  ordained  that  the  legislature  should  have  no  authority  and 
was  forbidden  to  assume  or  provide  by  taxation  or  otherwise  for 
the  payment  of  any  other  claim  or  pretended  liability  of  the  state 
to  the  school  and  university  funds.^ 

The  debt  repudiated  by  ordinance  No.  2  included  all  the  war 
debt  incurred  on  account  of  civil  as  well  as  military  expenditures. 
Some  ten  members  of  the  convention  went  on  record  in  protest 
against  the  repudiation  of  the  debt  for  civil  purposes,  on  the 
ground  that  it  was  not  required  by  the  President's  restoration 
policy.^  The  arguments  advanced  in  support  of  repudiating  the 
civil  debt  were :  first,  that  it  consisted  largely  of  treasury  war- 
rants issued  to  circulate  as  money  and  therefore  in  violation  of 
article  VII,  section  8,  of  the  amended  Constitution  of  1861; 
second,  that  the  assumption  of  this  debt  would  bankrupt  the 
state;  third,  that  the  warrants  were  in  the  hands  of  domestic 
speculators  who  had  evaded  military  service  during  the  war; 
and,  fourth,  that  a  large  amount  of  the  debt  had  been  contracted 
for  the  persecution  of  Union  sympathizers.*  Opposing  argu- 
ments were  based  on  the  injustice  to  those  who  had  furnished 
their  services  and  goods  to  the  state  institutions  and  civil  depart- 
ments, and  on  the  effect  the  repudiation  would  have  on  the  credit 
of  the  state.^ 

The  convention  appears  to  have  acted,  however,  in  accordance 
with  what  it  conceived  to  be  the  President's  restoration  policy. 


^Ibid.,  p.  46. 

^Ibid.,  p.  45. 

'Journal  of  the  Convention  of  1866,  p.  356. 

^Ramsdell,  Reconstruction  in  Texas,  p.  102. 

''Convention  Journal,  1866,  p.  117.     House  Journal,  11th  Leg.,  p.  193. 


A  Financial  History  of  Texas  181 

''We  have  by  ordinance  declared  the  entire  debt  growing  out 
of,  and  accruing  during  the  war  null  and  void,  and  forbidden 
the  legislature  assuming  or  providing  for  the  payment  of  any 
portion  of  it.  In  so  complete  and  full  a  manner  as  language  can 
express,  we  have  declared  ourselves  on  these  important  questions 
which  have  been  deemed  so  vital  to  sustaining  your  policy."^ 
No  record  has  been  found  of  a  suggestion  by  President  Johnson 
to  the  provisional  governor  or  to  the  convention  of  this  repudia- 
tive  action.  He  had,  however,  in  the  previous  year  made  the 
suggestion  to  Provisional  Governor  Holden  of  North  Carolina 
that  ''Every  dollar  of  the  debt  created  to  aid  the  rebellion 
agaii?rt  the  United  States  should  be  repudiated  finally  and  for- 
ever. '  '2 

The  provisional  government  of  Texas  ceased  and  a  restored 
state  government  went  into  effect  August  20,  1866.  An  act  of 
November  9,  1866,  entitled  "  An  Act  to  ascertain  the  amount  of, 
and  adjusting  and  funding  the  State  debt,  and  to  state  any  and 
all  accounts  between  the  State  and  individuals,"  created  an  audi- 
torial board  "for  the  purpose  of  auditing  all  claims  for  money 
against  the  state  and  reauditing  all  the  audited  liabilities  of  the 
state  not  inhibited  by  the  Constitution."-^  The  principal  work  of 
the  board  consisted  in  separating  from  the  debt  incurred  between 
January  28,  1861,  and  August  5,  1865,  that  part  incurred  on 
account  of  expenditures  authorized  before  January  28,  1861. 
The  action  of  the  board  ceased  December  1,  1867.*  An  analysis 
of  its  report  shows  the  following: 

Item  I.  8  per  cent  bonds  of  March  20,  1861. 
Amount  issued,  $16,000.00.  Amount  rejected, 
$86.04.  Amount  of  principal  recognized  or  esti- 
mated valid,  $15,913.96 ;  interest,  $1,319.60.  Total 
$17,233.56.  Amount  audited,  $4,133.56.  Balance 
outstanding $      13,100.00 


'Report  of  select  committee  to  prepare  an  address  to  President 
Andrew  Johnson;   Journal  of  the  Convention  of  1866,  p.  317. 

-W.  L.  Fleming,  Documentary  History  of  Reconstruction,  vol.  1,  p.  180. 

'Laws  of  1866.  p.  122. 

"The  report  of  the  board  is  to  be  found  in  the  Comptroller's  Report, 
1868-9,  pp.  32-37;  also  in  the  Reconstruction  Convention  Journal,  1869, 
vol.   1,  pp.  364-8. 


182  Bulletin  of  tJie  University  of  Texas 

Item  II.  8  per  cent  bonds  of  April  8,  1861.  Amount 
issued,  $917,000.00.1  Amount  rejected,  $855,- 
111.95  Amount  of  principal  recognized  or  esti- 
mated valid,  $61,888.05;  interest,  $13,909.00. 
Total,  $75,797.05.  Amount  audited,  $30,389.88. 
Balance  outstanding  and  unaudited $      45,407.17 

Item  III.  10  per  cent  warrants.  Amount  issued 
less  amounts  funded  and  received  in  the  collec- 
tion of  revenue,  $109,988.69.  Interest  to  Decem- 
ber 1,  1867,  $69,292.44.  Total  principal  and 
interest,  $179,281.12.  Amount  rejected  and  esti- 
mated to  be  invalid,  $30,591.29.  Amount  audited 
as  valid,  $72,680.05.  Amount  outstanding  and 
unaudited  and  estimated  valid,  $76,009.79.  Total 
recognized  and  estimated  valid 148,689.84 

Item  IV.  Non-interest  notes  (warrants).  Amount 
issued  less  amounts  funded  and  received  in  the 
collection  of  revenue,  $62,942.82.  Interest  al- 
lowed to  December  1,  1867,  $27,065.41.  Total 
principal  and  interest,  $90,008.23.  Amount  of 
principal  and  interest  audited,  $35,047.61. 
Amount  outstanding,  of  which  $11,541.72  was 
estimated  as  valid,  $54,960.62.  Total  audited 
and  estimated  valid 78,466.51 

Item  V.  Amount  of  8  per  cent  certificates  issued 
in  payment  of  minute  companies  under  act  of 
November  12,  1866,  and  audited,  $3,570.76.  In- 
terest and  amount  unaudited,  $354.97.    Total.  .  3,925.73 

Item  VI.  Unaudited  claims.  Amount  audited, 
$3,323.48.  Estimated  outstanding,  $5,000.00. 
Total 8,323.48 

The  debt  described  in  items  V  and  VI  appears  to  have  been 
incurred  after  August  5, 1865.  Omitting  these,  therefore,  for  the 
time  being,  the  total  of  the  debt  described  in  Items  I-IV  was, 
with  interest,  $1,217,517.96 ;  total  rejected,  $897,331 ;  total  valid, 
$320,186.96. 


^This  figure  includes  the  $17,000  unused  and  the  $1,000  mutilated. 


A  Fiivancial  History  of  Texas  183 

Adding  the  total  of  Items  V  and  VI  to  the  valid, 

the  total  valid  debt  was. $  332,436.17 

Audited 149,145.34 

Outstanding  and  unaudited 183,290.83 

The  act  creating  the  auditorial  board  authorized  the  issue  of 
6  per  cent,  ten-year  bonds,  interest  payable  semi-annually,  for 
which  audited  valid  claims  were  exchangeable  at  the  state 
treasury.  The  board  issued  $149,145.34  certificates  of  valid 
claims,  and  $125,100.00  were  exchanged  for  bonds  known  as 
the  Throckmorton  bonds. 

The  auditorial  board  confined  its  action  to  the  debts  due 
individuals  and  did  not  audit  those  due  the  special  funds,  suck 
as  the  school  and  university  funds.  The  indebtedness  of  the^ 
state  to  these  funds  was  defined  by  ordinance  No.  12  of  the- 
Convention  of  1866.  Pursuant  to  this  ordinance,  the  legislature^ 
by  act  of  November  12,  1866,  provided  for  the  issue  to  the 
school  fund  of  5  per  cent,  twelve-year  bonds,  interest  payable- 
semi-annually,  in  place  of  the  United  States  bonds  and  interest 
coupons  transferred  from  that  fund  since  January  28,  1861^ 
and  which  were  then  in  the  possession  of  the  state  or  which 
might  be  recovered  by  the  state.^  Bonds  of  the  state  to  the 
amount  of  $82,168.82,  bearing  date  of  January  1,  1867,  were 
accordingly  debited  to  the  school  fund.^  This-  same  act  of 
November  12,  1866,  in  obedience  to  the  requirements  of  ordi- 
nance No.  12,  provided  for  the  issue  of  similar  bonds  to  the 
university  fund  on  account  of  the  United  States  bonds  and 
interest  coupons  transferred  from  that  fund  in  February,  1860, 
and  February,  1861.^  This  transfer  of  the  United  States  bonds 
w^as  made  under  authority  of  the  acts  of  January  31,  1860,  and 
February  8,  1861.  Bonds  of  the  state,  bearing  date  of  January 
1,  1867,  to  the  amount  of  $134,472.26,  were  debited  to  the  uni- 
versity fund  in  pursuance  of  the  law  of  1866.  Ordinance  No-. 
12  specifically  provided  that  these  were  the  only  liabilities  of 
the  state  to  the  school  and  university  funds  which  the  legis- 
lature had  any  authority  to  assume  or  provide  for  by  taxation 

^Laws  of  1866,  p.  208. 

^Report  of  the  Comptroller,  1868-9.     Laws  of  1883,  p.  15. 
^Hoiise  Journal,  17th  Leg.,   Called  Sess.,   p.   27. 


184  Bulletin  of  tlie  University  of  Texas 

or  otherwise.  Despite  this  prohibition,  however,  every  comp- 
troller's report  from  1866  to  1883  included  in  the  school  fund 
statement  6  per  cent  state  bonds  for  $320,367.13,  dated  May 
13,  1865,  and  in  the  university  fund  statement,  a  comptroller's 
certificate  of  indebtedness  for  $10,300.41,  dated  June  8,  1865. 
The  6  per  cent  bonds  were  issued  to  the  school  fund  for  the 
purpose  of  funding  state  treasury  warrants  received  by  the 
school  fund  from  railroad  companies  in  payment  of  interest  on 
their  bonds.^  The  warrants  funded  were  received  during  the 
period  from  August  31,  1863,  to  June  8,  1865.  The  certificate 
of  indebtedness  held  by  the  university  fund  w^as  on  account  of 
treasury  warrants  received  by  that  fund  from  land  sales  which 
were  fundable  in  the  8  per  cent  bonds  of  April  8,  1861.^  The 
warrants  were  received  between  February,  1861,  and  June  8, 
1865. 

The  action  on  the  debt  of  the  state  taken  by  the  constitutional 
convention  of  1866  and  by  the  legislature  of  1866  was  not  to 
be  the  final  one,  however,  for  the  civil  government  which  had 
been  inaugurated  on  August  13,  1866,  and  under  which  an 
orderly  ascertainment  of,  and  provisions  for,  the  debt  had  been 
made,  was  short-lived.  Under  the  Reconstruction  Acts  of  Con- 
gress of  March  and  July,  1867,  Texas  was  held  to  be  unrecon- 
structed, her  civil  government  was  abolished,  and  a  military 
or  provisional  government  again  established."  Another  consti- 
tutional convention  was  ordered  and  held  in  Austin  from  June 
1  to  August  31,  1868,  and  from  December  7,  1868,  to  February 
6,  1869.  A  constitution  was  framed  which  was  accepted  by  the 
people  in  an  election  held  from  November  30,  1869,  to  Decem- 
ber 3,  1869,  and  this  constitution  was  ratified  by  the  Congress 
of  the  United  States  on  March  30,  1870.  Between  the  date  of 
-the  amending  of  the  constitution  by  the  convention  of  1866 
and  that  of  the  framing  of  the  constitution  adopted  in  1869, 
the  Fourth  Amendment  to  the  Constitution  of  the  United  States 
had  been  adopted.    This  amendment  was  proposed  on  June  16, 

^Laws  of  1863,  p.  37.  Laws  of  1864,  Called  Sess.,  p.  9,  and  Second 
Called  Sess.,  p.  14. 

^Laws  of  1861,  p.  19.     Laws  of  1862,  p.  42. 

•Gammel,  Laws,  vol.  6,  pp.  3-12.  For  the  history  of  this  period,  see 
Texas  v.  White,  7  Wallace,  pp.  700-743   (1868). 


A  Financial  History  of  Texas  185 

1866,  and  was  declared  by  Confess  adopted  on  July  21,  1868. 
Section  4  of  this  amendment  provided  that  ''neither  the  United 
States  nor  any  State  shall  assume  or  pay  any  debt  or  obligation 
incurred  in  aid  of  insurrection  or  rebellion  against  the  United 
States  .  .  .;  but  all  such  debts,  obligations  and  claims  shall 
be  held  illegal  and  void."  Accordingly,  the  Texas  Constitution 
of  1869,  article  12,  section  34,  provided: 

(1)  That  ''All  debts  created  by  the  so-called  State  of  Texas, 
from  and  after  the  28th  day  of  January,  1861,  and  prior  to  the 
5th  day  of  August,  1865,  were  and  are  null  and  void;  and  the 
Legislature  is  prohibited  from  making  any  provision  for  the 
acknowledgment  or  payment  of  such  debts/' 

(2)  That  "All  unpaid  balances,  whether  of  salary,  per  diem, 
or  nionthly  allowance,  due  to  employees  of  the  State,  who  were 
in  the  service  thereof  on  the  said  28th  day  of  January,  18j61, 
civil  or  military,  and  who  gave  their  aid,  countenance,  or  sup- 
port to  the  rebellion  then  inaugurated  against  the  government 
of  the  United  States,  or  turned  their  arms  against  the  said 
government,  thereby  forfeited  the  sums  annually  due  them." 

(3)  That  "All  the  10  per  cent  warrants  issued  for  military 
services  and  exchanged  during  the  rebellion  at  the  treasury 
for  non-interest  warrants  are  hereby  declared  to  have  been 
fully  paid  and  discharged." 

(4)  "Provided,  that  any  loyal  person  or  his  or  her  heirs  or 
legal  representatives  may,  by  proper  legal  proceedings,  to  be 
commenced  within  two  years  after  the  acceptance  of  this  Con- 
stitution by  the  Congress  of  the  United  States,  show  proof  in 
avoidance  of  any  contract  made,  or  revise  or  annul  any  decree 
or  judgment  rendered  since  the  said  28th  day  of  January,  when, 
through  fraud  practiced,  or  threats  of  violence  used  towards 
such  persons,  no  adequate  consideration  for  the  contract  has 
been  received ;  or  when,  through  absence  from  the  State  of  such 
person,  or  through  political  prejudice  against  such  person,  the 
decision  complained  of  was  not  fair  and  impartial."^ 

Nothing  was  done  by  the  legislature  about  the  debt  until  1871, 
when  by  the  act  of  May  2,  1871,  provision  was  made  for  its 


^The  paragraphing  is  that  of  the  present  writer. 


186  Bulletin  of  tJie  University  of  Texas 

reauditiiig/  A  bill  was  introduced  in  the  called  session  oi'  tlie 
Twelfth  Legislature  in  1870  to  audit  and  ascertain  the  public 
debt,  but  it  was  not  passed  until  the  eve  of  adjournment  and 
did  not  receive  the  signature  of  the  governor.-  An  auditorial 
board  was  created  by  this  act  whose  duty  it  was  to  examine 
the  work  of  the  auditorial  board  of  1866  and  to  audit  all  other 
claims  against  the  state.  The  act  provided  that  bonds  issued 
by  the  board  of  1866  for  claims  void  under  the  constitution  should 
be  considered  void  and  should  be  canceled.  A  comparison  of 
the  provisions  of  1866  and  of  1869  shows  that  the  only  claims 
interdicted  by  the  Constitution  of  1869  and  not  by  that  of  1866 
were:  (1)  the  unpaid  balances  due  those  employees  of  the  state 
on  January  28,  1861,  who  did  not  remain  loyal  to  the  government 
of  the  United  States,  and  (2)  the  10  per  cent  warrants  issued  for 
military  services  and  exchanged  during  the  war  for  non-interest- 
bearing  warrants. 

The  auditorial  board  created  by  the  act  of  May  2,  1871,  made 
its  first  report  under  date  of  September  1,  1871.^  The  report 
stated  that,  ''upon  a  careful  examination  of  the  transactions 
of  the  board  of  1866,  we  have  been  unable  to  discover  any  error 
in  the  auditing  with  the  exception  of  $10,283.12  allowed  as  in- 
terest on  non-interest  warrants — ,  but  this  is  a  question  about 
which  persons  may  honestly  differ."  In  regard  to  the  unpaid 
balances  due  disloyal  persons  on  January  28,  1861,  and  the  10 
per  cent  interest  warrants  exchanged  during  the  war  for  non- 
interest  warrants,  each  of  which  was  interdicted  by  the  Con- 
stitution of  1869,  the  board  stated  that  the  former  character  of 
claims  would  not  exceed  $10,000,  the  latter  $78,466.51,  and  that 
the  board  of  1866  had  funded  about  $40,000  of  these  claims  in 
6  per  cent  bonds.  On  account  of  the  higher  interest  (10  per 
cent)  which  the  valid  portion  of  the  claims  would  bear  if  re- 
audited  as  compared  with  the  6  per  cent  interest  which  the 
bonds  bore,  the  board  estimated  that  the  state  would  save  only 
about  $25,000  by  repudiating  the  claims.     Because  of  the  com- 

'Laws    of   1871,   p.   67.     Supplementary   act;    ibid.,   p.    123.      Supple- 
mentary act;  Laws  of  1871,  Adj.  Sess.,  p.  25. 
^Report  of  the  Comptroller,  1870,  p.  10. 
^House  Journal,  12th   Leg.,   Adj.    Sess.,   p.    66. 


A  Financial  History  of  Texas  187 

paratively  small  amount  involved  and  because  the  holders  of 
the  bonds  refused  to  submit  them  for  cancelation,  on  the  ground 
that  they  were  issued  in  accordance  with  the  constitution  and 
laws  of  Texas  and  of  the  United  States,  the  board,  which  was 
composed  of  the  attorney  general,  the  comptroller,  and  the 
treasurer  of  the  state,  recommended  that  the  action  of  the  board 
of  1866  in  regard  to  these  claims  be  confirmed.  The  recom- 
mendation of  the  board  in  regard  to  the  bonds  was  adopted  by 
the  legislature  and  appropriation  for  the  payment  of  interest 
on  the  claims  was  made  in  the  act  of  November  13.  1871. ^ 

This  legislative  validation  of  the  action  of  the  board  of  1866 
extended  only  to  the  bonds  based  upon  the  certificates  of  in- 
debtedness issued  by  that  board.  But  for  this  validating  act 
some  ^40,000  of  the  6  per  cent  bonds  issued  under  date  of  Jan- 
uary 1,  1867,  would  have  been  held  null  and  void,  because  they 
represented  either  debt  to  disloyal  persons  or  were  on  account  of 
an  exchange  of  interest  warrants  for  non-interest  warrants  dur- 
ing the  war.  It  will  be  remembered  that  there  were  some  $24,- 
045.34  of  unfunded  certificates  issued  by  the  board  of  1866.  The 
act  of  November  13,  1871,  validated  these  also,  subject  to  the 
provisions  of  the  Constitution  of  1869.  The  board  of  1866  had 
reported  that  the  estimated  valid  portion  of  the  outstanding 
and  unaudited  debt  amounted  to  $183,290.83.  These  claims 
were  also  subject,  in  auditing  by  the  boards  of  .1871  and  sub- 
sequent years,  to  the  provisions  of  the  Constitution  of  1869.  It 
will  thus  be  noted  that  the  act  of  November  13,  1861,  observed 
the  distinction  between  bonds  and  unfunded  claims.  Although 
some  of  the  bonds  issued  during  the  war  and  based  upon  liabili- 
ties incurred  before  the  war  would  be  included  in  these  un- 
funded claims,  their  amount  was  not  known  aiid  they  could  not 
be  properly  classed  as  a  part  of  the  bonded  debt  of  the  state 
until  they  had  been  audited.  The  life  of  the  auditorial  board 
was  extended  by  the  act  of  November  13,  1871,  to  January  1, 
1873,  and  it  was  also  provided  that  all  interest-bearing  claims 
should  be  presented  on  or  before  March  1,  1872,  on  pain  of  not 
bearing  interest  after  that  date. 

The  act  of  May  2,  1871,  provided  for  the  issue  and  sale  of  6 

'Laws  of  1871,   Adj.   Sess.,  p.  25. 


188  Bulletin  of  tJie  University  of  Texas 

per  cent,  twenty-year  bonds  to  secure  the  money  needed  to  pay 
the  valid  claims  ascertained  by  the  auditorial  board;  it  was  also 
provided  that  holders  of  claims  might  exchange  their  claims 
for  these  bonds.  The  claims  subject  to  payment  from  the  pro- 
ceeds of  the  sale  of  these  bonds,  or  to  funding  in  them,  were  the 
valid  certificates  of  .indebtedness  issued  by  the  board  of  1866 
and  the  other  valid  claims  of  the  same  period.  The  act  of 
November  13,  1871,  not  only  validated  the  bonds  of  1866,  amount- 
ing to  $125,000.00,  but  also  appropriated  $40,269.15  to  pay 
the  interest  upon  them  from  date  of  issue.  It  also  appropriated 
$15,000  to  pay  the  principal  and  interest  of  the  bonds  issued 
under  the  act  of  March  20,  1861.  These  amounts  were  drawn 
during  the  fiscal  year  ending  August  31,  1872.^ 

All  of  this  legislation  of  the  state  and  all  the  acts  of  the 
auditorial  boards  related  to  the  debt  of  the  state  to  individuals. 
The  5  per  cent  bonds,  amounting  to  $82,168.82,  issued  under  the 
act  of  November  12,  1866,  to  the  school  fund,  and  the  5  per  cent 
bonds,  amounting  to  $134,472.26,  issued  under  the  same  act  to 
the  university  fund,  were  issued  to  those  funds  because  of  trans- 
fers made  from  them  to  the  state  revenue  account.  Those  held 
by  the  school  fund  were  on  account  of  the  United  States  bonds 
and  interest  coupons  transferred  under  authority  of  the  act  of 
January  11,  1862,  and  which  in  1866  were  in  the  possession  of  the 
state,  or  which  might  be  recovered  by  the  state. ^  The  comp- 
troller's reports  for  1874  and  subsequent  years  err  in  describing 
the  state  bonds  issued  to  the  school  fund  at  this  time. as  indem- 
nity for  United  States  bonds  used  during  the  war.  They  were 
only  transferred  from  the  school  fund  during  the  war,  but  as 
the  ordinance  of  1866  and  the  comptrollers'  reports  of  1866  and 
1867  make  clear,  they  were  used  for  general  revenue  purposes 
between  August,  1865.  and  January,  1867.  The  5  per  cent  bonds 
issued  to  the  university  fund  were  on  account  of  the  United 
States  bonds  and  interest  coupons  transferred  from  that  fund 
to  state  revenue  account  in  February,  1860,  and  February,  1861. 
It  is  highly  questionable  whether  one  should  regard  the  bonds 

^Report  of  the  Comptroller,  1872,  pp.  29-30. 

^For  act  of  January  11,  1862,  see  Laws  of  1862,  p.  55.     For  act  of 
November  12,  1866,  see  Laws  of  1866,  p.  208. 


A  Financial  History  of  Texas  189 

of  the' state  held  by  its  special  funds  as  binding  state  obliga- 
tions, subject,  like  the  state  debt  to  individuals,  to  all  debt  con- 
ditions against  non-payment  of  interest  and  failure  to  pay  prin- 
cipal at  the  contracted  date.  It  is  certainly  questionable  in  the 
case  of  the  state  obligations  held  at  this  time  by  the  school  and 
university  funds.  Neither  the  Constitution  of  1846  nor  the 
amended  Constitution  of  1861  protected  the  educational  funds 
against  the  transfer  of  the  funds  authorized  by  the  acts  of 
January  31,  1860,  and  January  11,  1862.^  Legislative  action 
alone  was  responsible  for  the  possession  of  the  5  per  cent  United 
States  bonds  by  these  funds  and  legislative  action  was  unre- 
strained by  any  constitutional  provision  against  recalling  them 
at  any  time.  But  even  if  they  should  be  regarded  at  the  time 
of  issue  as  a  binding,  bonded  obligation,  the  failure  of  the  state 
to  acknowledge  their  validity,  as  it  did  the  other  debt  authorized 
in  lJ?o6.  throws  doubt  on  their  validity  after  the  overthrow  of 
civil  government  in  1867.  Neither  the  legislature  nor  the  au- 
ditorial board  of  1871  took  any  cognizance  of  these  5  per  cent 
state  bonds,  and  this  appears  to  have  been  fatal  to  their  po- 
sition, for  they  were  classed  as  doubtful  or  worthless  in  every 
comptroller's  report  after  1870,  except  that  of  1881-2.  The 
passage  of  the  Reconstruction  Acts  of  Congress  in  1867  and  the 
consequent  overthrow  of  civil  government  and  the  establishment 
of  military  government  in  Texas,  threw  the  state  back  exactly 
to  where  it  had  been  at  the  close  of  the  war  in  1865.  As  the 
bonded  debt  due  individuals  and  authorized  by  the  act  of  1866 
had  to  be  reviewed  to  be  valid,  so  it  would  seem  any  other 
bonded  debt  authorized  in  1866  should  have  been  reviewed  and 
validated  to  be  a  binding  obligation.  This  was  not  done  for 
the  5  per  cent  bonds  held  by  the  school  and  university  funds, 
and  they  remained  of  doubtful  validity,  no  interest  being  paid 
on  them  and  their  date  of  maturity  passing  without  payment, 
until  1883.  By  this  act  of  February  23,  1883,  they  were  vali- 
dated and  were  ordered  paid  with  accrued  interests 

The  reports  of  the  comptroller  after  1865  carried  also  among 


^See  art.  10  of  the  Constitution  of  1846  and  the  amended  Constitu- 
tion of  1861. 

=^Laws  of  1883,  p.  15. 


190  Bulletin  of  tJie  University  of  Texas 

the  debt  of  doubtful  validity  the  6  per  cent  state  bon.js  date^l 
May  13,  1865,  and  the  comptroller's  certificate  of  in  lebte.dness 
dated  June  8,  1865,  the  bonds  being  held  by  the  school  fund,  and 
the  certificate  by  the  university  fund.  As  has  b^cn  explained 
these  were  specifically  declared  void  as  war  debts  in  1866,  and 
they  were  not  validated  until  1883.  Their  validation  and  pay- 
ment under  the  act  of  February  23,  1883,  was,  as  far  as  legal 
obligation  was  concerned,  a  pure  gift  under  the  ^^uise  of  payment 
of  a  debt.  The  failure  of  the  state  up  to  1883  to  pay  the  inter- 
est or  the  principal  of  the  above  obligations  held  by  the  school 
and  university  funds  was  therefore  legally  justifiable  in  the 
light  of  the  history  of  the  obligations. 

If  the  action  taken  by  the  constitutional  conventions  and  the 
legislature  relative  to  the  principal  of  the  war  dobi,  can  be  justi- 
fied, was  the  interest  on  the  bonded  indebtedness  found  to  be 
valid  by  the  auditorial  boards  of  1866  and  1871  paid  after  the 
war?  It  appears  from  the  report  of  the  auditorial  board  of 
1866  that  interest  on  the  bonds  of  March  20,  1861,  was  paid 
to  January  1,  1867,  and  that  no  interest  was  paid  on  the  bonds 
of  April  8,  1861,  from  January  1,  1865,  to  January  1,  1867.^ 
Such  of  this  debt  as  was  found  to  be  valid  by  the  board  o^  1866 
and  was  funded  in  the  bonds  authorized  by  the  act  of  November 
9,  1866,  had  no  interest  paid  on  it  until  the  passage  of  the  act 
of  November  ]  ?,  1871.  The  failure  to  pay  interest  as  it  fell  due 
is  not  chargeable  to  the  dereliction  of  the  State  of  Texas  but 
to  the  Congress  of  the  United  States.  If  there  had  been  any 
bonded  debt  which  antedated  the  war,  there  would  have  been  no 
question  as  to  the  obligation  of  the  state  to  pay  interest  on  it 
at  the  time  stipulated;  but  all  of  the  bonded  debt  of  the  state 
was  authorized  during  the  war  or  after  January  28,  1861. 
Therefore,  the  question  as  to  payment  of  interest  on  the  valid 
debt  subsequent  to  the  war  depends  on  the  date  of  the  establish- 
ment of  the  validity  of  the  debt.  Because  of  the  abolition  of  the 
civil  government  and  the  re-establishment  of  the  military  govern- 
ment by  the  Reconstruction  Acts  of  Congress  in  March  and 
July  of  1867  the  action  of  Texas  in  1866  providing  for  its  ascer- 
tainment was  nullified,  and  Texas  may  be  said  not  to  have  had 


'See  Comptroller's  ledger,  1861-5,  pp.  437-441. 


A  Financial  History  of  Texas  191 

any  known  valid  debt  until  1871.  As  soon  as  the  valid  debt  was 
determined,  payment  of  accrued  interest  was  promptly  made, 
and  interest  thereafter  on  it  and  on  all  other  debt  was  always 
promptly  paid. 

It  may  be  asked  further.  Was  the  principal  of  the  valid  debt 
promptly  paid  at  maturity  ?  The  bonds  issued  under  the  act  of 
March  20,  1861,  were  payable  July  1, 1871.  Because  these  bonds 
were  issued  during  the  war  period,  though  to  fund  floating  lia- 
bilities incurred  before  the  war,  they  were  subject  to  auditing 
before  their  validity  could  be  established.  In  view  of  the  Re- 
construction Acts  of  Congress,  there  was  no  legally  constituted 
body  that  could  finally  determine  their  validity  until  1871.  By 
the  act  of  November  13,  1871,  appropriation  was  made  for  the 
audited  and  valid  portion  of  this  debt.  The  bonds  issued  under 
the  act  of  April  8,  1861,  were  due  sixteen  years  from  their  date. 
Such  of  these  as  were  valid  and  were  exchanged  for  the  bonds 
issuf  d  in  1866  were  paid  at  maturity ;  those  valid  and  which  were 
not  exchanged  for  the  bonds  of  1866  were  either  exchanged  for 
bonds  authorized  by  the  act  of  May  2,  1871,  or  were  paid  be- 
fore their  maturity. 

The  beginning  of  the  Reconstruction  debt  proper  was  in  1870. 
By  the  act  of  August  5,  1870,  the  issue  of  $750,000  of  7  per 
cent  gold  bonds,  redeemable  after  twenty  years  and  payable 
after  forty  years,  was  authorized  to  meet  the  appropriations 
made  for  maintaining  ranging  companies  on  the  frontier.^  Au- 
thority was  given  also  to  levy  a  tax  sufficient  to  pay  the  interest 
and  provide  a  sinking  fund  for  the  bonds,  and  the  governor 
was  empowered  to  sell  or  hypothecate  the  issues  at  the  best 
price  obtainable,  the  commission  on  sale,  however,  being  restrict- 
ed to  not  more  than  1  per  cent.  The  governor,  the  comptroller 
and  the  treasurer  were  at  loggerheads  for  a  time,  the  latter 
officers  declining  to  give  their  signatures  to  the  engraver  on  the 
ground  that  it  would  place  the  credit  of  the  state  in  the  en- 
graver's hands.-  Only  three  hundred  and  fifty  of  the  boiids 
were  sold  during  this  period  and  these  in  the  year  1871  and  at 

^Laws  of  1870,  Called  Sess.,  p.  45.     These  are  known  as  the  frontier 
defence  bonds. 
The  San  Antonio  Daily  Herald,  September  7,  1870. 


192  Bulletin  of  tlie  University  of  Texas 

an  average  price  of  89.4.  The  gross  amount  received  \\'as 
$313,200,  which,  after  deducting  commissions,  left  a  net  amount 
of  $312,200.^  Of  the  three  hundred  and  fifty  sold,  one  hundred 
and  seventy-four  were  exchanged  for  cash  held  in  the  Agricul- 
tural and  Mechanical  College  fund,  leaving  only  one  hundred 
and  seventy-six  disposed  of  to  outsiders.  These  circumstances 
attest  a  difficulty  of  sale  due  to  lack  of  faith  in  the  state's  credit. 
The  interest  on  these  bonds  was  met  and  a  sinking  fund  was 
established.  The  sinking  fund,  however,  was  not  invested  in 
United  States  bonds,  but  was  used  to  retire  the  frontier  defence 
bonds,  and  up  to  August  31,  1874,  $53,000  of  these  bonds  had 
been  redeemed. 

Beginning  with  the  fiscal  yeav  1870  there  were  annual  de- 
ficiencies in  the  current  revenue,  and  bond  sales  w^ere  resorted 
to  for  the  purpose  of  making  ends  meet.  In  May,  1871,  $400,000 
10  per  cent  bonds,  redeemable  in  lawful  currency  of  the  United 
States  after  two  years  and  payable  after  five  years,  were  au- 
thorized to  cover,  the  deficiencies  of  1871  and  1872,  and  in 
December,  1871,  an  issue  of  $2,000,000  7  per  cent,  twenty  year 
bonds,  were  authorized  for  deficiency  purposes.  There  Avere  no 
restrictions  as  to  the  price  at  which  these  bonds  should  be  sold, 
and  in  the  case  of  the  December  issue  no  limit  as  to  the  com- 
mission that  might  be  paid  for  sale.-  In  May,  1873,  $500,000 
10  per  cent  bonds,  redeemable  after  three  years  and  payable 
after  ten  years,  were  authorized  for  the  purpose  of  funding  state 
warrants.^  There  were  sold  in  1871  and  1872  two  hundred  and 
fifty-two  of  the  deficiency  bonds  authorized  by  the  act  of  May 
2,  1871.  At  an  average  price  of  93.5  they  yielded  gross  $235,- 
870.74,  but  with  commissions  deducted  the  net  amount  received 
was  $229,375.94,  and  $156,433.47  of  this  amount  was  received 
in  state  warrants.*  None  of  the  deficiency  bonds  authorized  by 
the  act  of  December  2,  1871,  was  sold,  and  only  $89,800  of  the 
10  per  cent  funding  bonds  Avere  issued  up  to  August  31,  1874. 
In  addition  to  bonds  sold,  three  hundred  and  fifty  of  the  frontier 


'Statement  of  the  Comptroller;  House  Journal,  16th  Leg.,  First  Sess., 
p.  79. 

-Laws  of  1871,  p.  106.     Laws  of  1871,  Adj.  Sess.,  p.  63. 

^Laws  of  1873,  p.  119. 

*House  Journal,  16th  Leg.,  First  Sess.,  p.  79. 


A  Financial  History  of  Texas  19^ 

defence  and  one  hundred  of  the  deficiency  bonds  were  hypothe- 
cated with  Williams  and  Guion,  of  New  York,  for.  $327,074.70. 

Excluding  $650,000  of  debt  authorized  by  the  act  of  March  4, 
1874,  because  it  represents  a  measure  of  the  administration  which 
succeeded  the  Reconstruction,  there  was  added  to  the  funded 
debt  of  the  state  up  to  August  31,  1874,  a  gross  amount  of 
$900,900.  There  was  redeemed  during  the  period  $57,100  of 
debt,  so  that  the  net  addition  was  $843,800.  There  was  besides 
a  floating  debt  of  $1,574,826.31,  making  a  total  debt  contracted 
before  January  14,  1874,  or  the  date  when  the  Democratic  ad- 
ministration succeeded  the  radical,  of  $2,418,626.31^  There  was 
also  the  debt  due  the  school  and  university  funds  which  was 
classed  as  of  doubtful  validity  and  which  amounted  to  $809,- 
311.67.^  The  sum  of  the  recognized  and  the  doubtful  debt  is 
$3,227,937.98.  Deducting  $956,321.88,— which  is  the  sum  of  the 
debt  ascertained  by  the  auditorial  boards  of  1866  and  1871 
($251,047.84),  the  debt  of  doubtful  validity  with  accrued  in- 
teres?"  due  the  university  fund,  and  the  indebtedness  to  the  school 
fund  under  the  act  of  November  15,  1864, — as  the  amount  of 
pre-reconstruction  debt,  there  remains  $2,271,616.10.  This  latter 
amount  is  the  debt  imputable  to  Reconstruction.  The  portion  of 
this  Avhich  was  incurred  during  the  Davis  administration  is 
approximately  $2,172,262.21. 

The  debt  policy  of  the  reconstructionists  is  open  to  sharp  criti- 
cism. The  issue  of  bonds  to  meet  deficiencies  in  the  revenue  when 
caused  by  extravagance  in  expenditures  is  illegitimate  financier- 
ing and  is  to  be  wholly  condemned.  The  funded  debt  also  existed 
in  five  different  shapes  and  was  issued  under  as  many  different 
statutes.  A  debt  issued  under  more  uniform  provisions  would 
probably  have  been  more  inviting  to  capitalists.  Considering, 
however,  the  character  of  the  state  government  at  this  time  and 
the  doubtfulness  of  state  credit  generally,  the  prices  at  which 
the  bonds  were  sold  were  fair. 

The  result  of  the  large  floating  debt  was  injustice  to  creditors, 
an  added  cost  to  the  state  for  supplies  purchased,  and  collusion 


^The  Report  of  the  Comptroller,  1874,  gives  as  the  amount  of  certifi- 
cates of  public  debt  fundable  in  6  per  cent  bonds  $40,974.84.  The  amount 
given  should  be  $46,947.84. 

-This  amount  includes  $262,003.05  accrued  interest. 

13— H 


194  Bulletin  of  the  University  of  Texas 

between  officials  and  creditors  in  the  payment  of  warrants.^  The 
discount  on  warrants  was  as  much  as  50  per  cent,  and  the  spectacle 
was  presented  of  men  and  boys  employed  by  merchants  to  stand 
in  the  treasurer's  office  from  mornino-  until  night  to  watch  for 
deposits.^^  Suggestions  were  made  for  paying  warrants  accord- 
ing to  their  date  or  number,  and  for  making  them  receivable  at 
the  treasury  in  discharge  of  debts  due  the  state,  but  neither  of 
these  was  adopted,  though  the  former  would  seem  to  have  been 
desirable.  As  soon  as  the  new  administration  came  into  power 
the  payment  of  warrants  dated  before  January  15,  1874,  was 
temporarily  arrested,  but  they  were  allowed  8  per  cent  interest 
from  date  of  registration  with  the  comptroller.^ 

But  for  the  chance  obstinacy  of  the  comptroller  and  the  opposi- 
tion of  the  governor,  Texas  would  have  issued  from  the  Recon- 
struction period  saddled  with  a  heavy  debt  representing  subsidies 
to  railroads.  The  state  was  under  moral  obligation  to  the  Inter- 
national Railroad  Company  to  adjust  its  claim  to  a  subsidy,  be- 
cause construction  of  the  road  had  begun  and  the  company  had 
otherwise  met  the  conditions  of  the  chartering  act.  The  blocking 
of  the  will  of  the  legislature  and  of  the  governor  in  this  matter  by 
the  comptroller,  while  his  action  redounded  to  the  welfare  of  the 
state,  was,  to  put  it  mildly,  extraordinarily  presumptions.  In  the 
adjustment  of  the  matter  a  very  respectable  element  favored  a 
subsidy  and  thought  that  this  kind  of  aid  generally  would  be  the 
most  effective  in  securing  railroads.  Tlie  cost,  however,  which 
this  policy  would  have  involved  would  have  been  beyond  the 
ability  of  the  state,  and  the  grant  of  land  and  exemption  from 
taxation  for  twenty-five  years  to  the  International  Company  and 
land  grants  to  other  companies  is  to  be  regarded  as  a  wise  solution 
of  the  vexed  question. 


^Message  of  Governor  Coke,  February  10,  1874.  Warrants  outstand- 
ing on  the  general  revenue  fund  amounted  on  August  31,  1872,  to 
$544,745.24;  on  August  31,  1873,  to  $679,404.83;  on  August  31,  1874.  to 
$628,370.23,  and  warrants  outstanding  on  the  school  fund  at  the  latter 
date  amounted  to  $104,577.74. 

-House  Journal,  12th  Leg.,  Second  Sess.,  p.  435.  Message  of  Governor 
Davis,  January  14,  1873.     Message  of  Governor  Coke,  February  10,  1874. 

'Act  of  March  7,  1874;  Laws  of  1874,  p.  239. 


A  Financial  History  of  Texas  195 

CONCLUSION. 

The  salient  features  of  the  Reconstruction  financial  period  of 
Texas  history  are  the  large  growth  of  expenditures,  the  great  in- 
crease in  taxation,  and  the  rapid  accumulation  of  a  comparatively 
heavy  debt.  The  finances  do  not  indicate  the  rule,  however,  of 
such  venal  and  pillaging  adventurers  as  infested  other  southern 
state  with  carpet-bag  governments.  At  the  same  time  there  was 
more  open  abuse  of  public  trust  than  at  any  other  period  of  the 
state's  history.  An  adjutant-general  was  guilty  of  defalcation  of 
about  $30,000  -^  the  funds  of  the  treasury  department  were  used 
for  a  time  to  abet  private  ends  and  its  books  fell  into  ''reckless 
disorder  ;2  petty  jobbery  existed  in  supplying  state  institutions, 
and  bribery  was  charged  on  high  authority  to  have  been  instru- 
mental in  securing  the  subsidy  to  the  International  Railroad. 


'House  Journal,  13th  Leg.,  p.  34. 
-House  Journal,  13th  Leg.,  p.  27. 


PART  VI. 

THE  PERIOD  OF  RECOVERY,  1874-1880. 

Chapter  I. 

INTRODUCTION. 

Richard  Coke  was  inaugurated  governor  on  January  15,  1874, 
which  event  marked  the  political  end  of  the  Republican  regime 
and  of  the  Reconstruction  in  Texas. 

Although  a  tax  rate  of  fifty  cents  had  been  imposed  since  1871 
and  bonds  had  been  issued  to  meet  the  expense  of  frontier  de- 
fence and  to  cover  deficiencies  in  the  ordinary  revenues,  an  empty 
treasury  and  a  rapidly  increasing  floating  debt  confronted  the 
new  Democratic  administration.  There  was  only  $37,137.00  in 
the  treasury  available  for  general  purposes,  and  the  net  receipts 
to  accrue  from  taxes  by  September  1,  1874,  were  estimated  at 
$481,714.00,  while  the  expenditures  were  estimated  at  $1,236,- 
116.00.^  There  were,  in  addition,  claims  of  school  teachers  for 
services  rendered  prior  to  July  1,  1873,  amounting  to  over 
$400,000.00,  an  unexecuted  cash  pension  law,  and  a  harassing 
controversy  with  the  International  Railroad  over  a  bond  subsidy. 

The  state's  financial  problem  was  difficult,  and  its  solution 
called  for  intelligence,  courage,  and  patience.  Immediate  clari- 
fication and  settlement  were  not  possible,  for  though  legislation 
could  accomplish  something,  it  was  indispensable  that  there 
should  be  time  for  the  recuperation  of  the  industrial  and  com- 
mercial forces  which  had  been  depressed  by  the  war,  the  Recon- 
struction, and  the  prostrating  panic  of  1873.  Additional  taxa- 
tion as  a  way  out  was  inexpedient  in  view  of  the  already  un- 
popular height  of  the  tax  rate,  and  bonds  could  not  be  immediate- 
ly sold  except  at  an  almost  prohibitive  discount.  The  means  of 
relief  to  the  treasury  which  were  adopted  were  the  stoppage  of 
payment  of  warrants  dated  before  January  15,  1874,  the  use  of 
special  trust  funds,  and  the  issue  of  bonds.  The  treasury  did 
not  get  on  an  actual  cash  basis,  however,  until  the  spring  of  1879. 
Each  year  between  1874  and  1879  saw  treasury  deficits,  the 


^Message  of  Governor  Coke,  February  10,  1874. 


A  Financial  History  of  Texas  197 

state 's  warrants  at  a  discount,  the  maintenance  of  the  same  high, 
tax  rate,  an  increase  in  the  bonded  debt  to  meet  the  ordinary  ex- 
penses of  government,  and  parsimony  in  expenditures  for  char- 
itable, educational  and  other  developmental  purposes. 

Industrially  a  new  era  began  in  1879,  as  that  was  the  year 
when  there  was  generally  throughout  the  country  a  marked  up- 
ward movement  indicating  the  completion  of  industrial  recovery 
from  the  panic  of  1873.^  The  population  of  the  state  grew  from 
818,579  in  1870  to  1,591,749  in  1880.  This  was  a  percentage  of 
increase  during  the  decade  of  94.5  as  compared  with  35.5  during 
the  preceding  decade.  Negroes  numbered  393,384  in  1880  and 
constituted  24.7  per  cent  of  the  total  population  as  compared 
with  30.9  per  cent  in  1870.  The  population  was  preponderantly 
rural,  only  8.5  per  cent  living  in  towns  of  2,500  population  and 
over.  The  density  of  population  remained  small,  though  there 
was  an  increase  from  3.1  in  1870  to  6.1  in  1880. 

Agriculture  engaged  68.8  per  cent  of  the  population  ten  years 
of  age  and  over  employed  in  all  occupations.  Agriculture 
showed  a  marked  improvement  in  condition  in  1880  over  1870. 
Though  the  number  of  farms  increased  185  per  cent  and  the 
acreage  in  farms  increased  97.3  per  cent,  the  percentage  increase 
in  the  improved  acreage  was  326.6.  A  large  part  of  the  land  area 
of  the  state  was  unoccupied  and  uncultivated,  however,  as  shown 
by  the  fact  that  the  farm  area  was  only  21.6  per  cent  of  the  total 
land  area  of  the  state.  The  vast  area  of  land  not  in  farms  was 
either  owned  by  the  state  or  was  privately  owned  and  held  as  a 
speculation.  The  value  of  farm  land  and  buildings  amounted  to 
$170,468,886  in  1880,  which  was  an  increase  of  254.2  per  cent 
over  1870.  Farm  implements  and  machinery  showed  an  increase 
of  233.1  per  cent,  and  domestic  animals,  poultry  and  bees  an  in- 
crease of  155.7  per  cent.  The  value  of  livestock  was  $60,307,987 
in  1880  as  compared  with  $37,425,794  in  1870. 

Agriculture  and  stockraising  were  the  chief  sources  of  wealth 
to  the  state.  Mining  was  negligible,  and  manufacturing  was 
not  advancing  in  a  remarkable  way.  The  number  of  manufactur- 
ing establishments  increased  only  25  per  cent,  and  the  value  of 
the  products  increased  from  $11,517,302  to  $20,719,928  between 


^Noyes,   Forty  Years  of  American  Finance,  p.  66. 


198  Bulletin  of  the  University  of  Texas 

1870  and  1880.  The  percentage  of  growth  in  the  value  of  the 
products  was  79.9,  or  less  than  that  in  population. 

Under  the  liberal  land  grant  policy  which  was  in  ett'ect  from 
1873  to  1882  railroad  mileage  grew  rapidly.  The  increase  be- 
tween 1870  and  1880  was  from  711  miles  to  3,244,  and  that  be- 
tween 1873  and  1882  was  from  1,578  to  6,009. 

Statistics  for  the  growth  of  state  banking  are  not  available, 
but  those  for  the  national  banking  system  do  not  show  a  rapid 
growth  of  that  system.^  The  number  of  national  banks  increased 
from  4  in  1870  to  13  in  1880,  and  their  deposits  from  $575,000 
to  $1,579,000. 

A  new  era  also  in  the  state's  finances  began  in  1879,  due  in 
no  small  part  to  the  country's  prosperity,  but  also  to  a  vigorous 
financial  policy.  The  important  features  of  this  policy  were  the 
refunding  and  payment  of  the  public  debt,  the  sale  of  the  public 
lands,  changes  in  the  administration  of  taxes,  the  adoption  of 
new  business  taxes,  and  reduction  in  expenditures.  The  policy 
adopted  in  1879  was  known  as  the  "pay-as-you-go"  policy,  and 
the  most  striking,  and  at  the  same  time  the  most  effective,  of  the 
measures  relating  to  expenditures  which  were  adopted  to  insti- 
tute this  policy  was  the  reduction  of  the  school  fund's  share  of 
the  general  revenues  from  the  customary  one-fourth  to  one-sixth. 
The  fiscal  operations  of  the  state  government  during  the  year 
1880  evidence  the  advent  of  a  new  era  and  the  final  issuance  from 
the  financial  slough  into  which  the  state  entered  in  1861. 


^The  state  banks  chartered  during  the  Reconstruction  period  were 
supposed  to  report  to  the  office  of  the  secretary  of  state,  but  apparently 
the  law  was  not  obeyed,  for  the  reports  of  the  secretary  of  state  contain 
statements  of  only  a  few  banks. 


Chapter  2. 
expenditures. 

The  period  from  1874  to  1880  was  one  unusually  full  of  influ- 
ences conducive  to  economy  in  public  expenditures.  The  panic 
of  1873  cast  its  shadow  of  depression  over  the  country  until  1879^ 
and  this  alone  warranted  the  most  economical  administration  of 
the  state's  affairs.  Other  potent  reasons  for  the  practice  of  pub- 
lic economy  were  the  high  rate  of  taxation,  the  large  floating 
debt  and  the  weakness  of  the  state's  credit,  the  imperative  need 
of  putting  down  internal  lawlessness,  of  protecting  the  border, 
and  of  satisfying  the  minimum  demands  of  the  charitable,  cor- 
rectional, and  educational  functions  of  the  state. 

The  Constitution  of  1876  reduced  the  salaries  of  state  officials 
and  judges,  and  there  was  also  a  decrease  during  this  period 
in  the  support  of  the  several  state  departments,  the  judiciary, 
and  the  charitable  institutions.^     The  reduction  in  salaries  and. 


^The  following  is  a   comparison   between   the  salaries   stipulated   in 
the  constitutions  of  1869  and  1876: 

1869  1876 

Govei  nor    $5,000  $4,000 

Supreme  court  judges,  each 4,500  3,500 

District  judges,  each 3,500  2,500 

Comptroller,    treasurer,    commissioner    of    the 

general  land  office,  each 3,000      .  2,500 

Secretary  of  state,  attorney  general,  each 3,000  2,000 

Superintendent  of  the  lunatic  asylum 2,500  2,000 

Superintendents  of  the  blind  and  the  deaf  and 

dumb  institutes,  each    2,000  2,000 

Per  diem  of  the  members  of  the  legislature 8  $5  for  the  first 

sixty  days  and 
$2  thereafter. 
The  appropriation  bill  for  1880  and  1881  in  response  to  the  "pay-as- 
you-go"  slogan  made  sweeping  reductions  in  the  salaries  of  the  em- 
ployees of  the  state.  The  salaries  of  the  chief  clerks  in  the  state 
and  treasury  departments  were  cut  $300  each;  the  salary  of  the  chief 
clerk  in  the  comptroller's  department  was  pared  $500,  that  of  the  gov- 
ernor's private  secretary,  $300,  and  corresponding  reductions  were 
made  in  the  salaries  of  the  other  employees.  See  Report  of  the 
Special  Committee  on  Retrenchment,  February  18,  1879;  House  Journal. 
16th  Leg.,  First  Sess.,  p.  421. 


200  Bulletin  of  the   University  of  Texas 

the  severe  limitations  on  the  debt-creating  and  taxing  powers 
of  the  state  and  local  governments  reflect  the  commercial, 
financial  and  agricultural  depression  which  follow^ed  the  panic 
of  1873.  Expenditures  on  account  of  sessions  of  the  legislature 
declined,  those  for  direct  promotion  of  immigration  and  for 
the  geological  survey  disappeared,  and  the  share  of  the  general 
revenues  appropriated  to  the  school  fund  was  reduced  to  one- 
sixth  for  the  year  1880.  The  creation  in  1876  of  the  depart- 
ment of  insurance,  statistics  and  history,  buildings-  for  the 
Agricultural  and  Mechanical  College,  and  quarantine  against 
yellow  fever  were  responsible  for  minor  additions  to  expendi- 
tures. The  expenditures  of  this  period  showed  no  decrease 
over  those  of  the  preceding  period,  however,  and  this  was  due 
chiefly  to  the  pensioning  of  the  veterans  of  the  Texas  Revo- 
lution, to  the  protection  of  the  frontier,  and,  above  all,  to  the 
heavy  interest  charge  of  the  funded  debt  and  to  the  payment 
of  debts  incurred  before  January  15,  1874.  The  pension  policy 
underwent  frequent  changes.  The  act  of  August  13,  1870,  had 
granted  $250  annually  to  each  surviving  veteran  of  the  Texas 
Revolution  and  an  additional  $250  to  such  as  had  been  wounded, 
but  the  appropriation  of  $224,817  for  their  payment  in  1871 
and  1872  was  vetoed  by  Governor  Davis.^  In  1874  this  act 
was  repealed,  but  the  arrearages  under  it  were  made  payable 
in  10%  bonds,  and  a  new  pension  act  was  passed  granting  an 
annual  pension  of  $150  to  indigent  veterans  and  an  additional 
"$150  to  those  who  were  disabled  by  reason  of  wounds  received 
in  the  service.^  This  act  was  in  turn  repealed  in  1875  on  the 
ground  that  all  who  were  eligible  to  its  benefits  had  received 
10%  pension  bonds  and  that  the  law  afforded  an  opportunity 
lor  the  perpetration  of  frau(J  on  the  state.^  The  Constitution 
of  1876  authorized  pensions  not  to  exceed  $150  per  annum  to 
indigent  survivors  of  the  Texas  Revolution  and  their  unmarried 
widows.*    In  1876  an  annual  pension  of  $150  was  granted,  but 


*Laws  of  1870,  Called  Sess.,  p.  119.    Laws  of  1871,  p.  106. 

*Laws  of  1874,  p.  114. 

'Act  of  March  13,  1875;  Laws  of  1875,  p.  112.  The  comptroller  de- 
clined in  1874  to  issue  certificates  for  pensions  because  of  the  indefi- 
niteness  of  the  law  in  defining  indigency. 

*Art.  16,  sec.  15. 


A  Financial  History  of  Texas  201 

it  was  repealed  in  1879  because  of  the  unexpected  number  of 
applicants.  There  was  substituted  for  the  cash  pension  a  land 
grant  of  640  acres  to  each  indigent  veteran.^  The  land  grant 
measure  relieved  the  treasury  of  pension  expenditures  and  so 
assisted  in  establishing  the  "pay-as-you-go"  policy.  Pension 
bonds  authorized  in  1874  were  issued  to  the  amount  of  $1,115,- 
009,  and  up  to  March,  1879,  $501,750  interest  was  paid  on  them.- 
"Warrants  drawn  on  the  treasury  on  account  of  casli  pensions 
aggregated  $283,662  for  the  period,  and  as  $213,542  of  this 
amount  was  drawn  in  1879,  the  hasty  repeal  of  the  act  of  1876 
may  be  understood. 

The  penitentiary  had  been  leased  in  1871  for  fifteen  years, 
and  as  there  was  no  resumption  of  control  during  the  period 
the  only  expense  to  the  state,  was  the  conveyance  of  prisoners 
and  the  beginning  of  the  construction  of  the  eastern  branch 
of  the  penitentiary  at  Rusk.  The  conditions  existing  at  Hunts- 
ville  were  described  as  discreditable  to  the  state,  but  the  in- 
crease in  taxation  which  resumption  of  control  would  entail 
was  a  bogey  against  which  the  cry  for  reform  was  unavailing.* 

The  increase  of  expenditures  on  account  of  the  protection 
of  the  frontier  against  marauding  Mexicans  and  desperadoes 
and  the  interest  on  the  public  debt  offset  any  economies  effected 
in  other  lines.  The  protection  of  the  frontier  was  a  duty  which 
the  United  States  Government  should  have  performed,  and  it 
afterwards  reimbursed  the  state  for  the  expenditures  made,  but 
at  the  time  the  disbursements  were  made  they  constituted  an 
onerous  burden.  The  funding  of  the  floating  debt  incurred 
during  the  Davis  and  succeeding  administrations  and  the  issue 
of  bonds  to  meet  the  current  needs  of  the  government  account 
for  the  appearance  in  1875  of  a  heavy  annual  interest  charge. 
The  total  of  the  warrants  drawn  on  the  general  revenue  on 
account  of  these  two  items  of  expense  and  its  percentage  of 
total  warrants  drawn  were  as  follows: 


»Act  of  July  28,  1876;  Laws  of  1876,  p.  61.  Repealing  act,  March  13, 
1879;  Laws  of  1879,  p.  34.     Act  of  April  26,  1879;  ibid.,  p.  175. 

''House  Journal,  16tli  Leg.,  Reg.  Sess.,  p.  807. 

'Message  of  Governor  Coke,  April  18,  1876.  Galveston  News,  April 
30,  June  3,  8,  9,  and  20,  1876.     Laws  of  1876,  p.  193. 


202  Bulletin  of  the   University  of  Texas 

1874 $222,944  15.1% 

1875 461,608  35.9^0 

1876 502,408  37.9% 

1877 581,190  45.2% 

1878 522,020  45.2% 

1879 567,312  34.4% 

1880 432,595  31.7% 


Chapter  3. 

RECEIPTS. 

The  revenues  accruing  during  this  period  were  of  two  classes, 
ordinary  and  extraordinary:  the  latter  came  from  the  sale  of 
bonds,  the  former  from  taxes,  fees,  interest  on  investments, 
and  the  Jike.  The  following  table  shows  the  per  cent  of  total 
net  receipts  derived  from  taxes,  sale  of  bonds,  and  miscel- 
laneous sources  ■} 

Taxes.        Bonds.  Miscellaneous. 

1874 64.1     29.1      6.8 

1875 56.8     32.5     10.7 

1876 60.8     26.7     12.5 

1877-8- 79.5      5.6     14.9 

1879 82.6      8.3      9.1 

1880 66.7     22.6      0.7 

The  taxes,  in  their  order  of  importance,  were  the  general 
property  tax,  the  occupation  taxes,  and  the  poll  tax.^ 

'It  should  be.  remembered  that  this  table  does  not  represent  the 
contributions  to  the  general  revenue  account  only.  There  were  no 
receipts  from  bond  sales  accruing  to  this  account  in  1874,  1878,  and 
1880.  The  large  per  cent  shown  from  bond  sales  in  1880  is  due  to 
the  refunding  operations. 

'The  receipts  for  1877-8  are  net  receipts,  except  for  the  interest  re- 
ceived on  state  bonds  held  by  the  special  funds,  the  amount  of  which 
was  not  separately  stated  in  the  comptroller's  report. 

^The  reports  of  the  state's  financial  officers  are  not  so  compiled 
and  published  as  to  make  it  possible  to  state  what  proportion  of  the 
tax  receipts  each  of  the  taxes  contributed.  A  rough  idea  of  the 
proportion  may  be  gained  from  the  statistics  of  assessed  taxes,  but  the 
statistics  for  occupation  taxes  are  especially  defective:  they  are  in 
every  instance  reported  as  partial,  and  those  for  1876  are  not  pub- 
lished. In  the  case  of  the  general  property  tax  also  the  assessments 
are  not  complete.  The  following  are  the  amounts  and  percentages 
of  the  several  taxes   assessed   or   reported: 

Date         Property      Per  cent     Occupation     Per  cent      Poll  Per  cent 

1875  $1,254,354  71.7  $295,012  16.8         $198,322  11.5 

1876  1,288.246         211,134 

1877  1,594,828    385,943     ....  464,808 

1878  1,516,122    377,935     ....  500,211 

1879  1,519,516  61.3  425,429     17.1  531,778      21.6 

1880  1,594,853  57.4  636,580     22.9  542,603      19.5 


204  Bidletin  of  the   University  of  Texas 

A.     The  Property  Tax. 

The  scope  of  this  tax  remained  what  it  had  always  been,  and  it 
is  described  in  article  8,  section  1,  of  the  Constitution  of  1876 
to  be  as  follows:  ''All  property  in  this  state  owned  by  natural 
persons  or  corporations,  other  than  municipal,  shall  be  taxed  in 
proportion  to  its  value,  which  shall  be  ascertained  as  may  be 
provided  by  law."  The  constitution  exempted  from  taxation 
household  and  kitchen  furniture  to  the  value  of  $250  to  each 
family,^  and  empowered  the  leorislature  to  exempt  property  used 
for  burial,  religious,  charitable,  educational,  and  public  purposes, 
and  to  release  from  the  payment  of  state  and  county  taxes  the 
inhabitants  of  counties,  cities  and  towns  which  suffer  a  public 
calamity.^ 

The  act  of  August  21,  1876,  carried  out  these  constitutional 
permissions.^  It  also  exempted  state  pensions,  growing  crops, 
notes  taken  for  land,  the  shares  of  stock  of  domestic  corpora- 
tions whose  property  was  taxed  by  the  state,  and  it  provided 
that  only  the  excess  of  credits  over  debits  was  taxable.  The 
exemption  extended  to  land  notes,  or  mortgages,  was  repealed  in 
1879.*  In  1873  there  were  exempted  from  taxes  the  residents 
of  the  frontier  counties  of  Montague,  Wise,  Parker,  Hood,  Erath, 
Hamilton,  Lampasas,  Burnet,  Blanco,  Kendall,  Bandera,  Medina, 
Frio,  McMullen,  Duval,  Starr,  and  all  other  counties  lying  west 
and  southwest  of  these.  This  exemption  was  repealed  in  1875.'^ 
The  act  adjudicating  the  controversy  between  the  state  and  the 
International  Railroad  exempted  the  property  of  this  company 
from  state  and  other  taxes  for  twenty-five  years.^ 

Until  1870  the  work  of  the  assessment  and  collection  of  the 
general  property  tax  was  confided  to  one  officer — known  as  the 
assessor  and  coUecteor — in  each  county.  The  Constitution  of 
1869  changed  this  system  and  provided  that  the  justice  of  the 
peace,  of  whom  there  were  five  in  each  county,  should  be  the 
assessor  of  the  taxes  in  his  precinct  and  that  the  sheriff  should 


^The  amount  exempted  under  the  act  of  May  2,  1874,  was  $50. 

'Article  8,  sees.  2  and  10;   article  9,  sec.  9. 

^Laws  of  1876,   p.   275. 

*Laws  of  1879,  p.  39. 

•Laws  of  1875,  p.  10. 

'Act   of  March   10,   1875;    Special  Laws  of  1875,  p.   69. 


A  Financial  History  of  Texas  205 

be  the  collector.  This  system  worked  badly :  it  was  iinceiitrali:».ed, 
expensive,  and  inefficient.  Each  justice  was  paid  5  per  cent  of 
the  assessed  taxes  until  his  commission  reached  $1,000,  the  result 
of  which  was  that  after  each  one  had  assessed  $20,000  of  taxes, 
he  stopped  assessing  through  lack  of  inducement  to  additional 
work.^  An  amendment  to  the  constitution  was  proposed  and 
adopted  in  1873  which  called  for  a  return  to  the  old  system  of 
one  assessing  and  collecting  officer,  and  in  1875  this  was  enacted 
into  law.-  This  officer  was  to  assess  and  collect  both  state  and 
county  taxes,  was  to  be  elected  for  four  years  and  was  to  be 
paid  by  fees  graduated  to  the  assessed  values  but  with  no  maxi- 
mum prescribed.  This  system  was  short  lived,  however,  since 
the  Constitution  of  1876  ordered  a  different  one.  The  one  laid 
down  in  1876  is  the  one  now  in  use.  It  was  then  provided  that 
for  each  organized  county  there  should  be  an  assessor  of  taxes, 
and  in  counties  having  10,000  or  more  inhabitants  a  collector  of 
taxes,  each  elected  to  hold  office  for  two  years;  that  in  counties 
having  less  than  10,000  population  the  sheriff  should  be  the  ex- 
officio  collector.^  The  Constitution  of  1876  also  provided  that 
the  taxes  on  the  property  of  residents  of  an  unorganized  county 
should  be  assessed  and  collected  by  the  assessor  and  collector  of 
the  county  to  which  it  was  attached  for  judicial  purposes,  though 
the  taxes  on  lands  in  such  counties  owned  by  non-residents  and 
lands'  lying  in  the  territory  not  laid  off  into  counties  should  be 
assessed  and  collected  at  the  office  of  the  comptroller.* 

The  policy  adopted  in  1875  of  fixing  no  limit  to  the  com- 
pensation which  the  assessor  and  the  collector  might  receive  was 
followed  throughout  this  period.  The  assessor  received  5  per 
cent  on  the  amount  of  the  state  taxes  assessed  and  3  per  cent  on 
the  amount  of  county  taxes  assessed,  and  the  collector  received 


^Message  of  Governor  Coke,  January  12,  1875.  The  comptroller's 
report  for  1874  states  that  the  city  assessments  for  Galveston  exceeded 
the  state  and  county  assessment   for  the  whole  county  by  $8,528,424. 

^Laws  of  1874,  p.  234.     Laws  of  1875,  p.  92. 

'Art.  8,  sees.  14  and  16.  Acts  of  August  21,  1876;  Laws  of  1876,  pp. 
255,    259. 

*Art.  8,  sec.  12.  Such  provision  bears  witness  to  the  frontier  char- 
acter of  a  large  part  of  western  Texas.  In  1876  there  were  152  organ- 
ized counties  and  21  unorganized.     Comptroller's  Report,  1876,  p.   67. 


206  Bulletin  of  the   University  of  Texas 

liked  percentages  on  the  amounts  collected.  In  view  of  these 
wide-open  limits  there  was  no  criticism,  such  as  was  urged  in 
the  preceding  period,  that  the  policy  as  to  compensation  failed  to 
make  the  interests  of  the  officers  identical  with  those  of  the  state. 
There  was  also  no  criticism  that  this  policy  resulted  in  excessive 
compensation  to  some  officers. 

The  laws  in  regard  to  the  place  of  assessment  and  collection  of 
taxes  are  important  in  their  bearing  upon  the  operation  of  the 
general  property  tax.  Under  the  Constitution  of  1869  and  the 
legislation  thereunder  real  property  could  be  rendered  and  the 
taxes  thereon  paid  either  in  the  county  where  the  property  was  lo- 
cated or  in  the  county  where  the  owner  or  agent  resided ;  personal 
property  was  assessable  where  the  owner  or  agent  resided.^  The 
alternatives  here  offered  opened  the  way  for  property  to  escape 
assessment,  but  the  poor  facilities  which  existed  in  the  state  at 
this  time  for  making  remittances  and  for  transmitting  intelli- 
gence made  rather  liberal  provisions  necessary.  The  Constitution 
of  1876  laid  down  the  rule  that :  ' '  All  property,  whether  owned 
by  persons  or  corporations,  shall  be  assessed  for  taxation  and 
the  taxes  paid  in  the  county  where  situated,  but  the  legislature 
may,  by  a  two-thirds  vote,  authorize  the  payment  of  taxes  of 
non-residents  of  counties  to  be  made  at  the  office  of  the  comp- 
troller of  public  accounts."-  The  laws  carrying  out  these  provi- 
sions, with  the  exception  of  unorganized  counties,  were  clear  as  to 
the  place  of  taxation  of  real  property,  but  not  as  to  the  place 
of  taxation  of  personal  property,  and  it  remained  for  the 
courts  to  decide  that  tangible  personalty  was,  like  real  prop- 
erty, taxable  where  located;  intangible  personalty,  w^here  the 
owner  resided.^  At  first  only  the  lands  in  unorganized  counties 
and  territory  and  the  property  of  railroad,  telegraph,  plank  road 
and  turnpike  companies  in  unorganized  counties  were  assessed 


^Laws  of  1873,  p.  124.     Laws  of  1874,  p.  176. 

-Art.  8,  sec.  11.  The  provision  relating  to  unorganized  counties  has 
been   stated. 

^Ferris  v.  Kimble,  75  Tex.,  476  (1889).  Intangible  personalty — for  ex- 
ample, purchase  money  notes,  which  has  acquired  a  situs  in  the  state 
is  taxable  though  owned  by  a  non-resident;  Hall  v.  Miller,  102  Tex., 
289  (1909).  See  also  Jesse  French  Piano  and  Organ  Co.  v.  City  of 
Dallas,  61  S.  W.  Rep.,  942    (1901). 


A  Financial  History  of  Texas  207 

and  the  taxes  collected  by  the  comptroller;  but  on  account  of 
complaints  of  the  hardship  of  the  requirement  that  non-residents 
of  organized  counties  should  pay  only  to  the  collectors  of  such 
counties,  the  law  was  changed  so  as  to  permit  payment  to  the 
comptroller/ 

Paschal  said  of  taxation  in  this  state  during  the  Civil  War  and 
the  Reconstruction  that  it  was  "another  of  those  subjects  upon 
which  legislation  has  been  feverish,  restless,  changeable,  and 
almost  irreconcilable."  This  description  is  particularly  appli- 
cable to  the  legislation  relating  to  the  delinquent  taxes  and  un- 
rendered  property.  Such  matters  have  been  the  occasion  for 
more  kaleidoscopic,  voluminous,  intricate,  and  unavailing  legis- 
lation than  any  other  subject  of  taxation ;  and  this  was  especially 
true  of  the  period  1874-1880.  During  the  periods  of  the  Civil 
War  and  the  Reconstruction  there  was  a  vast  amount  of  prop- 
erty which  escaped  taxation  through  non-rendition  and  there  was 
very  much  delinquency  in  the  payment  of  taxes  assessed.^ 

Direct  taxation  was  comparatively  unimportant  during  the 
periods  of  the  republic  and  of  statehood  down  to  the  Civil  War, 
and  there  was  a  virtual  breakdown  of  it  during  the  war.  It  was 
stringently  administered  under  the  military  governments,  but 
from  1869  to  1874  the  disfavor  in  which  the  state  government  was 
held  strongly  disinclined  taxpayers  to  the  payment  of  taxes. 
There  was  a  tendency  after  1875  to  overestimate  the  revenue 
that  f  ould  accrue  from  the  collection  of  the  delinquent  and  un- 
rendered  property  taxes  which  had  accumulated.^  But  the  un- 
certainty of  the  records,  the  doubtful  legality  of  the  taxes  levied 
during  the  Civil  War,  and  the  disfavor  in  which  the  military 
government  was  held,  influenced  the  legislature  to  take  a  very 
liberal,  if  not  coaxing,  course  with  respect  to  these  arrears.  Both 


^Laws  of  1879,  p.  41.  In  1876  about  39,000,000  acres  were  rendered 
in  the  counties  where  situated  and  about  23,000,000  in  counties  other 
than  where  situated. 

-The  comptroller  in  1874  estimated  that  more  than  35,000,000  acres 
of  land  escaped  assessment  in  1873,  and  the  official  estimate  of  the 
average  annual  loss  of  taxes  assessed  was  25  per  cent.  Messages  of 
Governor   Coke,   February   10,    1874,   and   January   12,    1875. 

'On  the  basis  of  25,000,000  acres  of  land  escaping  taxation  annually 
between  1870  and  1876,  and  valued  at  $1  per  acre,  the  back  taxes  were 
estimated  at  $750,000.  It  was  estimated  also  that  about  one-tenth  of 
the  taxes  assessed  were  delinquent;   Comptroller's  Report,  1876. 


208  Bulletin  of  the   University  of  Tex<is 

delinquent  taxes  and  taxes  on  unrendered  property  prior  to  the 
year  1870  were  relinquished,  and  those  before  January  1,  1873, 
were  waived  if  those  accruing  since  the  date  were  paid  before 
proceedings  for  forced  payment  were  begun.^  The  huge  task  of 
compiling  the  lists  of  property,  delinquent  and  unrendered,  de- 
volved upon  the  comptroller's  office.  The  work  was  so  slow  and 
the  difficulties  so  many  that  new  legislation  was  called  for  in 
1879.2 

Strangely  there  was  no  legislation  until  1879  carrying  into 
effect  the  provisions  of  the  new  constitution  in  regard  to  the  taxa- 
tion of  property  in  the  unorganized  counties  and  territory  not 
laid  off  into  counties,  and  this  was  a  serious  omission.  Until  1879 
the  provisions  of  pre-existing  laws  were  applied,  but  as  payment 
by  non-residents  of  such  counties  and  territory  could  not  be  en- 
forced, a  vast  amount  of  land  escaped  taxation.^ 

The  provisions  adopted  in  1876  in  regard  to  enforcement  of 
payment  of  current  taxes  were  an  improvement  over  those 
enacted  under  the  Constitution  of  1869,  but  they  were  not  a  solu- 
tion of  the  vexing  problem.  The  new  legislation  differed  from 
the  old  especially  in  that  it  did  not  postpone  for  so  long  a  period 
the  sale  of  land  for  delinquent  taxes.  Under  the  old  laws  the 
comptroller  every  five  years  returned  to  the  counties  the  listf; 
of  delinquents,  after  which  suit  in  the  nature  of  an  action  for 
debt  had  to  be  brought  in  the  district  court,  and  if  the  judgment 
was  in  favor  of  the  state,  the  sheriff  proceeded  to  sell  the  land 
or  offered  it  for  sale  once  in  each  six  months.*  The  new  legisla- 
tion provided  for  the  annual  seizure  and  sale  by  the  collector 
of  property  sufficient  to  pay  th^  taxes,  and  if  there  was  no  indi- 
vidual purchaser,  it  was  bid  off  to  the  state.'^  By  article  16,  sec- 
tion 50  of  the  constitution  the  homestead  was  protected  from 


^Acts  of  August  19,  1876;  Laws  of  1876,  pp.  214,  255. 

^Laws  of  1879,  p.  161.  Ibid.,  Special  Sess.,  p.  12.  By  1882  only  about 
forty  counties  had  been  furnished  delinquent  lists,  and  even  this  small 
result  of  six  years'  labor  was  defective,  owing  to  the  inaccuracy  of 
the  records  from  which  the  lists  were  compiled.  See  Act  of  May  16, 
1882;  Laws  of  1882,  p.  39. 

'Comptrollers'  reports,  1876,  1877-8.  It  was  estimated  that  not  one- 
fourteenth  of  the  taxes  due  by  non-residents  were  paid. 

*Laws  of  1871,  First  Sess.,  p.  51.     Laws  of  1873,  p.  187. 

''Laws  of  1876,  p.  259.  Laws  of  1879,  p.  46.  Ibid.,  pp.  46,  132,  and  141. 
Ibid.,  Spec,  Sess.,  p.  36. 


A  Financial  History  of  Texas  209 

seizure  and  forced  sale  for  any  taxes  except  those  due  on  it./^ 
In  order  to  ascertain  better  the  unrendered  land  it  was  provided 
in  1879  that  the  general  land  office  should  furnish  each  assessor 
with  a  correct  abstract  of  all  the  existing  surveys  of  lands  in  his 
county  and  with  all  new  surveys  each  j^ear.- 

The  policy  of  bidding  off  lands  to  the  state  when  there  were 
no  individual  purchasers  which  had  been  followed  since  1846, 
except  during  the  period  of  the  Reconstruction,  came  in  for  criti- 
cism, and  the  policy  of  offering  continuously  such  lands  for  sale 
until  they  were  sold  was  advocated.^ 

There  was  a  change  made  during  this  period  in  the  dates  for 
the  assessment  and  collection  of  taxes  for  the  greater  convenience 
of  taxpayers  and  officers.  In  1874  the  final  date  for  the  rendition 
of  property  was  changed  from  April  1  to  May  1,  but  December 
1  remained  the  date  of  final  settlement  between  the  comptroller 
and  the  tax  collectors.*  In  1876  it  was  enacted  that  assessment 
should  take  place  between  January  1  and  June  1,  that  collec- 
tions should  begin  on  October  1  and  that  taxes  should  be  paid 
by  October  1  or  be  delinquent.^ 

A  frequent  complaint  met  with  in  this  period  of  the  state's 
financial  history,  and  especially  before  1876,  is  the  non-rendi- 
tion of  land.  This  resulted  in  inequality  of  taxation,  but  the 
explanation  for  this  escape  lay  largely  in  the  failure  of  the  law 
until  1879  to  provide  for  the  enforcement  of  payment  of  taxes  on 
lands  in  the  unorganized  counties.  Undervaluation  of  property 
and  vne  escape  of  personalty  characterized  the  period,  though  it 
had  been  hoped  that  the  legislation  of  1876  would  establish  a  just 
system.*^     The  United  States  Census  of  1880  gave  the  estimated 


^This  provision  first  appeared  in  the  Constitution  of  1869.  Wright  v. 
Straub,   64  Tex.,  64    (1885). 

^Laws  of  1879,  p.  24. 

^It  was  estimated  that  at  least  four-fifths  of  the  lands  offered  for 
sale  were  bid  off  to  the  state;  Comptroller's  Report,  1876.  An  act  of 
April  19,  1879,  provided  for  the  monthly  offering  for  sale  of  delinquent 
lands,  but  this  was  repealed  in  July  of  the  same  year,  and  the  old 
policy  returned   to;    Laws   of  1879,   p.    118;    ibid..   Spec.   Sess.,   p.   36. 

*Laws  of  1874,  p.  173. 

"Laws  of  1876,  pp.  259,  265. 

"Messages  of  Governor  Coke,  January  12,  1875,  and  April  19,  1876. 
Message  of  Governor  R.  B.  Hubbard,  January  14,  1879.  Comptroller's 
Report,   1875. 

14— H 


210  Bulletin  of  the   University  of  Texas 

true  value  of  the  property  in  the  state  to  be  $725,000,000.  The 
assessed  valuation  for  1880,  however,  was  only  $311,470,000, 
or  41.5  per  cent  of  the  true  value/  In  comparing  the  estimated 
true  and  assessed  values,  allowance  must  be  made  for  legal 
exemptions ;  but  these  would  account  for  only  a  small  part  of  the 
difference. 

There  was  no  standard  of  valuation  for  taxation  of  the  prop- 
erty of  individuals  during  the  Reconstruction  period.  In  1873 
it  was  enacted  that  rendition  and  valuation  should  be  under 
oath,  but  the  formal  oath  covered  only  the  completeness  of  the 
inventory  and  the  truth  of  answers  touching  it.  In  the  event  of 
disagreement  over  valuation  between  the  assessing  officer  and 
the  taxpayer  each  selected  an  arbitrator  and  they  a  third,  and 
the  decision  of  the  arbitrators  was  final.  The  standard  adopted 
in  1876  was  *'true  and  full  value,"  which  was  the  fair  cash 
market  value  at  voluntary  sale.-  The  oath  prescribed  in  1876 
for  the  taxpayer  did  not  differ  from  the  preceding  one,  but  that 
required  of  the  assessor  in  submitting  his  assessment  rolls  cov- 
ered the  completeness  of  the  list  and  the  truth  and  correctness  of 
the  valuation.  The  laws  provided  for  uniformity  of  assessment, 
but  no  adequate  provisions  were  made  for  carrying  them  out. 

The  Constitution  of  1876  failed  to  provide  for  the  machinery 
that  might  have  prevented  flagrant  differences  among  the  coun- 
ties in  the  percentage  of  assessed  to  true  values.  A  new  provi- 
sion in  Texas  constitutions  was  section  18  of  article  8  of  the 
Constitution  of  1876  which  reads:  "The  legislature  shall  provide 
for  equalizing,  as  near  as  may  be,  the  valuation  of  all  property 
subject  to  or  rendered  for  taxation,- (the  county  commissioner's 
court  to  constitute  a  board  of  equalization)  ;  and  may  also  pro- 
vide for  the  classification  of  lands  with  reference  to  their  value 
in  the  several  counties."  It  is  a  matter  of  speculation  whether 
this  ( verbiage  prevents  the  creation  of  a  state  board  of  equaliza- 
tion with  broad  powers  of  equalizing  all  county  values,  but  the 
fact  is  that  no  such  board  has  been  created.     The  duties  of  the 


^The  census  gives  $320,364,515  as  the  assessed  valuation,  but  this  does 
not  agree  with  the  amount  reported  by  the  comptroller,  and  the  latter's 
amount  is  taken.  See  Report  of  the  Tenth  Census  on  Valuation,  Taxa- 
tion, and  Public  Indebtedness. 

"Act    of    August    21,    1S76;    Laws    of    1S76,    p.    275. 


A  Financial  History  of  Texas  211 

county  boards  were  defined  for  the  first  time  in  1879/  For  un- 
organized counties  the  board  of  equalization  was  composed  of  the 
p:overnor,  the  attorney  general,  and  the  secretary  of  state.- 

An  explanation  sometimes  offered  for  the  undervaluation  ^or 
escape  of  property — especially  for  the  escape  of  intangible  prop- 
erty— is  the  high  rate  of  taxation.  The  weight  of'taxes  on  prop- 
erty cannot  be  understood  by  looking  at  the  state  rate  alone,  but 
the  rates  levied  by  ^  counties,  cities,  towns,  and  other  taxing  dis- 
tricts must  be  included.  The  Constitution  of  1876  limited  the 
state  tax  on  property,  exclusive  of  the  tax  to  pay  the  -public  debt, 
to  50  cents  on  the  $100  valuation.^  The  county  limit  of  taxation 
was  fixed  in  the  constitution  at  75  cents,  except  in  the  ca.se  of 
coast  counties  which  had  such  additional  taxing  power  as  the 
legislature  might  confer  to  construct  sea  walls,  breakwaters,  and 
for  sanitary  purposes,  and  except  for  the  purpose  of  paying 
county  debts  incurred  before  1876.*  The  county  tax,  as  lim- 
ited by  statute,  however,  was  fixed  at  75  cents,  outside  of  a  tax 
sufficient  to  pay  the  interest  on  the  bonds  subsidizing  railroads 
and  contribute  to  a  sinking  fund  for  such  bonds.®. 

The  taxing  power  of  towns  and  cities  was  so  defined  in  the 
constitution  as  to  resolve  them  into  several  classes.  It  was  pro- 
vided (1)  that  no  city  or  town  should  levy  more  than  one-half 
of  the  state  rate,  except '  for  the  payment  of  debts  already  in- 
curred and  except  for  the  erection  of  public  buildings  for  which 
latter  purpose  a  tax  not  to  exceed  50  cents  might  be  levied.*^ 
This  limited  the  rate  to  75  cents,  except  for  the  payment  of  debts 
inciK-'red  before  1876.  It  provided  (2)  that  cities  and  towns 
having  a  population  of  10,000  or  less  could  be  incorporated  only 
by  general  law,  with  a  tax  limit  for  current  expenses  of  25  cents ; 
and  (3)  that  cities  having  a  population  of  more  than  10,000 
could  be  incorporated  by  special  act  with  a  tax  limit  for  any  and 


I 


^Laws  of  1879,  p.  44.  I.  &  G.  N.  R.  R.  Co.  v.  Smith  County,  54 
Tex.,  1    (1880). 

-Laws  of  1879,  p.  141. 

''Art.  8,  sec.  9. 

^Art.  8,  sec.  9;   art.  11,  sec.  7. 

''Laws  of  1876,  p.  52;  ibid.,  p.  174.  Laws  of  1879,  pp.  33,  61,  109;  Rev. 
Stats.,  1879,  art.  1516. 

'Art.  8,  sec.  9. 


212 


Bulletin  of  the   University  of  Texas 


all  purposes  of  $2.50.^  These  rates  Avere  laid  down  as  maxima. 
The  actual  rates  which  were  levied  were  such  as  the  legislature 
authorized,  and  in  the  case  of  the  specially  chartered  cities  the 
maximum  authorized  has  not  been  uniformly  $2.50.  The  con- 
stitution provided  (4)  that  coast  cities  could  levy  au"!  .3ollect 
such  taxes  as  might  be  authorized  by  the  legislature  to  construct 
seawalls,  breakwaters,  and  for  sanitary  purposes.- 

It  was  also  provided  in  the  Constitution  of  1S76  that  the  legis- 
lature might  constitute  any  city  or  town  a  separate  and  inde- 
pendent school  district,  but  the  tax  limit  was  not  fixed.^  The 
statute  relating  to  the  subject  of  independonr  school  districts 
was  ambiguous  until  1881.* 

Throughout  the  period  of  1874-1880  the  rate '  of  the  property 
tax  for  the  state  purposes,  including  the  common  schools,  was 
50  cents,  and  one-fourth  of  the  proceeds  went  to  the  available 
school  fund."  County  rates  in  1876  varied  from  25  cents  in  Starr 
County  to  $1.20  in  Anderson.  'The  principal  burden  lay  in  the 
city  taxes,  however,  and  the  total  of  state,  county  and  city  taxes 
amounted  in  s.ome  instances  in  1880  to  $3.00  on  the  $100  valua- 
tion.**     There  were  no  taxes  levied  in  1880  for  schools  by  the 


^Art.  11,  sees.  4  and  5. 

^Art.  11,  sec.  7. 

^Art.  11,  sec.  10. 

*Laws  of  1876,  p.  209.     Laws  of  1881,  p.  64. 

''Laws  of  1875,  p.  243.     Laws  of  1879,  p.  145. 

1876. 
County  State  Tax 

Bexar    $0.50 

Dallas     0.50 

Galveston    0.50 

Harris    0.50 

Travis    0.50 


County  Tax 
$1.00  5/6 
.65 

.73  1/3 
.40 
.50 


1880 

State  tax  County  tax                Principal  city  Total 

$0.50  $0.85  $1.00  San  Antonio  $2.35 

0.50  0.75  1.75  Dallas  3.00 

0.50  0.70                  1.50  Galveston  2.70 

0.50  .20  2.00  Houston  2.70 

0.50  .50                    .90  Austin  1.90 


The  county  statistics  for  1876  are  taken  from  the  comptroller's 
report  for  1876;  those  for  1880  are  taken  from  the  Tenth  United  States 
Census. 


A  Financial  History  of  Texas  213 

counties  or  by  school  districts.  Other  minor  civil  divisiouw  re- 
ported only  $1,994  of  school  taxes. ^  Total  state,  county  and  local 
taxation  amounted  to  $4,568,716,  distributed  at  follows:  state, 
$2,188,540 ;  county,  $1,685,907 ;  local,  $694,269.^  A  rate  of  $3.00 
on  the  $100  valuation  is  a  high  direct  tax ;  for,  assuming  10  per 
cent  income  from  property,  such  a  rate  is  equivalent  to  a  tax  on 
income  of  thirty-three  and  one-third  per  cent.  It  is  to  be  re- 
membered, however,  that  evasion  and  undervaluation  reduced 
this  by  two-thirds  or  more,  and  any  opinion  of  the  heaviness  of 
taxation  during  this  and  the  preceding  period  as  well  should  be 
formed  in  the  light  of  facts  known  to  exist  regarding  under- 
valuation and  evasion.  For  those,  however,  who  could  not  or 
who  would  not  evade  or  undervalue  the  rates  were  burdensome. 
Between  1874  and  1880  expenditures  increased  47.6  per  cent; 
assessed  values,  27.3  per  cent.  The  high  mark  of  assessed  values 
was  reached  in  1877  when  they  were  $319,373,000  as  compared 
with  $244,510,000  in  1874  and  $311,470,000  in  1880 ;  but  partly 
because  of  a  relapse  of  financial  depression  and  partly  because 
non-residents  of  organized  counties  secured  lower  assessments 
through  their  appointed  agents,  assessed  values  fell  off  over 
$16,000,000  in  1878.^  Taxation  was  not  sufficient  to  prevent 
annual  deficits  in  the  general  revenue  account,  and  there  were 
bond  sales  for  the  benefit  of  this  account  in  1875,  1876,  1877, 
and  1879.  More  efficient  methods  of  administration  of  the  prop- 
erty tax  would  have  rendered  unnecessary  bond  sales  to  meet 
the  current  ordinary  expenditures.  A  special  interest  tax  of  15 
ceiits  was  urged  by  the  house  finance  committee  in  1876,  but 
it  was  opposed  by  the  governor.*  A  state  tax  rate  of  65  cents  is 
high,  but  in  view  of  undervaluation  this  would  have  been  only 
the  nominal  rate.  It  is  probable  that  if  the  additional  tax  had 
been  levied,  the  credit  of  the  state  would  have  been  better.^ 


^Tenth  Census  of  the  United  States,  1880.    Vol.  Valuation,  Taxation 
and  Public  Indebtedness,  p.  25. 
^Ibid. 

^Comptroller's  Report,  1879-80. 

^Letter  of  Governor  Coke  to  A.  C.  Gray,  November  27,  1876. 
^Galveston   News,    July    12   and   December   7,    1876. 


214  Bulletin  of  the   University  of  Texas 

B.     Business  Taxes. 

Under  business  taxes  are  included  the  oeneral  propery  lax 
modified  in  administrative  details  to  suit  the  special  conditions 
of  business,  the  ordmary  occupation  taxes,  and  the  special  occu- 
pation taxes. 

At  the  close  of  the  Reconstruction  period  a  somewhat  central- 
ized method  existed  of  taxing  by  the  general  property  tax  the 
property  of  railroad  and  telegraph  companies.  Their  property 
was  required  to  be  rendered  to  the  justice  of  the  peace  of  the 
precinct  where  the  principal  office  was  located,  and  the  lists 
were  then  forwarded  to  the  comptroller  for  his  approval  or  dis- 
approval. Incorporated  cities  and  towns  certified  their  tax  rates 
to  the  comptroller,  and  the  taxes  might  be  paid  to  him,  though 
payment  to  him  was  not  mandatory.^  The  Constitution  of  1876 
reversed  this  modified  employment  of  the  unit  method  of  assess- 
ment, and  provided  that  such  corporate  property  should  be  as- 
sessed and  the  taxes  collected  in  the  several  counties  where  it 
was  situated. 2  Exceptions  to  this  rule  were  and  are  (1)  that 
the  property  of  railroad,  telegraph,  plank  road  and  turnpike 
companies  in  unorganized  counties  shall  be  assessed  and  the 
taxes  thereon  collected  at  the  comptroller's  office,  and  (2)  that 
the  rolling  stock  of  a  railroad  company  shall  be  assessed  in  gross 
in  the  county  where  the  principal  office  is  located  and  the  value 
so  assessed  shall  be  apportioned  by  the  comptroller  among  the 
counties  on  the  basis  of  the  proportion  of  the  mileage  of  the 
road  in  each  county  to  the  total  mileage  of  the  road  in  the  state, 
the  taxes  being  collected  by  the  county  collectors.  A  wholly  de- 
centralized method  of  taxing  these  complicated  properties  was 
thus  fastened  upon  the  state,  and  the  results  compare  unfavor- 
ably with  those  under  the  preceding  method.^ 

^Act  of  April  30,   1874;    Laws  of  1874,  p.  175. 
^Art.   8,  sec.  8. 

*Act  of  August  21,  1876;   Laws  of  1876,  p.  275. 
Year  Miles 

1874  1409 

1875  1487 

1876  1493 

1877  1781 

1878  1929 

1879  1958 


Total  value 

Assessed  average 

value  per  mile 

$17,514,000 

$12,430 

16,605,000 

11,167 

16,577,000 

11,103 

15,040,000 

8.445 

15,229,000 

7,894 

14,817,000 

7,562 

A  Financial  Histonj  of  Terns  21.5 

Banking  was  the  other  business  for  which  special  rules  of 
assessment  were  laid  down.  Under  the  Constitution  of  1869 
state  banks  could  be  incorporated,  but  the  Constitution  of  1876 
returned  to  the  policy  which  prevailed  from  1846  to  1870  of 
prohibiting  the  establishment  of  state  banks.  National  banks, 
private  banks,  and  state  banks  chartered  between  1870  and  1876; 
were  the  banking  institutions  in  the  state.  They  were  taxed 
on  their  real  property,  tangible  personalty,  money,  credits  and 
securities,  less  deposits,  accounts  payable,  and  such  bonds  or 
other  securities  as  were  exempt  by  national  or  state  laws.  The 
shares  of  stock  of  national  banks  in  the  state  were  taxable  ta 
the  holder. 

Occupation  taxes  were  of  two  kinds;  namely,  what  may  he 
called  ordinary,  or  general,  and  special.  The  Constitution  of 
1876  empowered  the  legislature  to  impose  occupation  taxes, 
except  upon  persons  engaged  in  mechanical  and  agricultural 
pursuits,  but  all  such  taxes  had  to  be  equal  and  uniform  upon 
the  same  class  of  subjects  within  the  limits  of  the  authority^ 
levying  the  tax.^  The  occupations  which  were  taxed  were^ 
numerous,  but  they  were  the  same  in  general  as  those  taxed!, 
in  1873.  Occupations  called  useful  as  w^ell  as  those  which  po/pu.- 
larly  are  not  so  eonsidered  were  taxed.  Those  on  merchants' 
and  on  liquor  dealers  were  the  important  taxes  which  were 
heavily  increased.^  In  some  instances  the  taxes  were  intended 
to  be  prohibitive,  as,  for  example,  those  of  $1,000  on  nine  or 
ten-pin  alleys  and  of  $200  on  fortune  tellers.  The  taxes  on 
merchants  were  roughly  classified  according  to  the  amounts  of 
purchases,  and  in  the  case  of  a  number  of  occupations,  such  as 
photography,  and  dealing  in  stocks  and  bonds,  classification 
was  based  on  population  of  the  town  or  city.  The  rates  which 
counties,  cities  and  towns  could  levy  were  limited  by  the  con- 
stitution and  the  statutes  to  not  more  than  one-half  of  the  state^ 
rate,  but  in  the   case  of  some  occupations,  as   for  example^ 


^Art.  8,  sees.  1  and  2. 

""The  taxes  imposed  on  retail  liquor  dealers  by  the  acts  of  1873  and' 
1876  were  upheld  as  constitutional  in  Harris  v.  State,  4  Tex.  Crim.. 
App.,  131.  The  tax  on  lawyers,  was  upheld  in  Lanquille  v.  State,  4  Tex. 
Crim.  App.,  312  (1878).  See  also  ex-parte  Williams,  18  'ex.  Crim.  App.,. 
262    (1892). 


/ 


216  Bulletin  of  the   University  of  Texas 

lightning  rod  dealers  and  sewing  machine  dealers,  the  rates 
were  specified. 

The  occupation  tax  measure  wliich  is  the  most  celebrated  of 
any  in  the  annals  of  the  state  was  passed  in  this  period.  It  has 
gone  down  in  history^  as  the  Bell  Punch  Law,  and  applied  to 
the  sale  of  liquors.  According  to  it,  all  dealers  in  spirituous, 
vinous,  and  malt  liquors  in  quantities  less  than  a  quart  were 
required  to  pay  a  specific  occupation  tax  of  $250  per  annum, 
when  only  malt  liquors  were  sold  a  tax  of  $25,  and  a  tax  of 
two  cents  on  each  drink  except  malt,  for  Avhich  the  tax  was 
one-half  cent,  sold  or  drunk  on  the  licensor's  premises.  The 
seller  was  required  to  have  two  registers,  one  marked  "Alco- 
holic," the  other  **Malt,"  and  each  register  was  provided  with 
a  bell  which  was  struck  at  each  revolution  of  the  crank,  and 
with  a  device  which  registered  upon  the  face  of  the  machine 
the  number  of  revolutions  of  the  crank.  The  registers  were 
furnished  by  the  state  at  $10  each.  The  sale  of  each  drink 
had  to  be  registered  in  the  presence  of  the  purchaser,  and  it 
was  unlawful,  and  punishable  by  a  fine,  for  anj^  person  to  pay 
for  a  drink  until  it  had  been  registered.  Penalties  were  pre- 
scribed also  for  failure  to  pay  the  tax,  for  failure  to  turn  the 
crank,  for  any  willful  injury  to  the  register,  for  any  counter- 
feiting of  the  register,  and  so  on.  The  tax  collector  visited 
each  licensor  once  a  month  and  collected  the  tax.  One-third 
of  the  net  collections  in  each  county  accrued  to  the  county. 
Incorporated  cities  and  towns  could  levy  a  tax  of  one-fourth 
of  one  cent  on  spirituous  and  vinous,  and  One-eighth  of  one 
cent  on  malt,  drinks  sold.^  The  law  proved  to  be  a  failure  and 
was  repealed  in  1881. 

Another  celebrated  occupation  tax  enacted  in  1879  was  the 
-drummers'  tax.  It  amounted  to  $200,  but  it  Avas  not  imposed 
on  those  soliciting  for  houses  which  had  paid  the  merchants* 
•occupation  tax  of  $200,  an  exception  which  obviously  worked 
an  injustice  on  the  smaller  houses.     This  tax,  in  so  far  as  it 


^Act  of  April  3,  1879;  Laws  of  1879,  p.  71.  The  idea  of  this  tax 
appears  to  have  been  borrowed  from  Virginia;  message  of  Governor 
Roberts,  January  21,  1879.  Constitutionality  upheld  in  Albrecht  v. 
State,  8  Tex.  Crim.  App.,  216  (1880).     ' 


A  Financial  History  of  Texas  217 

applied  to  citizens  of  other  states,  was  declared  an  unconsti- 
tutional  interference   with   interstate    commerce.^ 

An  important  change  in  the  administration  of  occupation 
taxes  was  made  in  1879.  Until  1879  collectors  were  charged 
on  the  books  of  the  comptroller's  office  with  only  such  taxes 
as  they  reported  collected,  and  there  was  considerable  laxity 
in  reporting  collections.  By  the  system  adopted  in  1879  the 
collector  was  charged  on  the  comptroller's  books  with  an  allot- 
ment of  occupation  tax  receipts,  on  which  the  amounts  of  the 
taxes  were  printed,  and  he  was  responsible  for  the  value  of 
all  not  returned.  Loopholes  still  existed,  however,  for  de- 
frauding the  state."  Certain  of  these  taxes,  namely,  those  on 
sewing  machine  canvassers  and  clock  peddlers,  were,  without 
any  apparent  reason,  made  payable  directly  to  the  comptroller. 

The  description  "special  occupation  taxes"  is  applied  to 
those  paid  chiefly  by  corporations.  At  the  beginning  of  this 
period,  life,  fire,  and  marine  insurance  companies  were  the  only 
ones  of  the  great  modern  corporations  subject  in  this  state  to 
a  special  occupation  tax.  By  the  end  of  the  period,  however, 
and  as  a  result  of  the  tax  measures  adopted  in  1879,  not  only 
were  these  companies,  but  gas,  telegraph,  express,  sleeping  and 
dining  car,  and  railroad  companies  were  so  taxable.  Com- 
plaints that  the  general  property  tax  was  not  suited  to  reach 
the  tax-paying  ability  of  insurance,  transmission  and  trans- 
portation companies  were  not  heard  to  any  extent  during  this 
period,  and  between  1873  and  1879  corporations  were  singu- 
larly free  from  the  special  taxation  which  had  made  its  appear- 
ance in  the  preceding  period. 

In  1873  the  occupation  tax  payable  to  the  state  by  a  life 
insurance  company  was  $500,  that  payable  to  each  county,  $10; 
fire  and  marine  companies  each  paid  $200  to  the  state  and  $5 
to  the  county.  In  1876  the  tax  on  the  life  companies  was 
reduced  to  $200,  but  it  was  increased  in  1879  to  $300,  and  the 
county  tax  of  fire  and  marine  companies  was  doubled.  In  1879 
a  state  occupation  tax  of  $50  was  imposed  on  gas  companies 


^Ex-parte  Stockton,   33  Federal  Reporter,   95    (1887). 
''The   practice  was   reported   of  collectors   issuing  memorandum   re- 
ceipts;   Comptroller's   Report,   1881-2. 


218  Bulletin  of  the   University  of  Texas 

and  one  of  $750  on  express  companies,  but  $250  of  the  latter 
amount  was  apportionable  among  the  counties  on  the  bnsis  of 
the  business  done  in  each.  On  telegraph  companies  there  was 
imposed  in  1879  a  tax  of  one  cent  for  each  full  rate  message 
sent  and  one-half  cent  for  every  message  sent  at  less  than  full 
rate;  and  on  the  gross  receipts  derived  within  the  state  from 
passenger  travel  of  railroads,  steamboats,  and  stage  coaches,  a 
tax  of  one  per  cent  was  levied.^  Two  different  measures  taxing 
sleeping  and  dining  car  companies  were  passed  in  1879 :  the 
first  taxed  them  at  tlie  rate  of  $2  per  mile  of  railroad  in  the 
state  over  which  their  cars  ran;  the  second  imposed  an  ad 
valorem  tax  of  one-half  of  one  per  cent  on  the  value  of  cars 
owned  or  assigned  for  use  in  the  state.-  All  of  these  taxes 
were  payable  directly  to  the  comptroller.  The  tax  upon  sleep- 
ing and  dining  car  companies  exempted  them  from  all  other 
taxes.  No  county  or  city  could  employ  the  occupation  taxes 
imposed  on  telegraph,  railroad,  steamboat  and  stage  coach 
companies.  As  compared  with  present  day  occupation  taxes 
on  such  corporations,  these  taxes,  with  the  exception  of  the 
tax  on  the  gross  receipts  from  passenger  travel,  were  mere 
bagatelles. 

A  very  marked  extension  of  occupation  taxes  took  place,  as 
shown  above,  in  1879.  Financial  needs  rendered  some  increase 
in  taxation  desirable,  and  the  argument  for  the  extension  of  the 
occupation  taxes  was  chiefly  that  the  ad  valorem  property  tax 
did  not  reach  the  ability  of  those  engaged  and  that  this  failure 
was  to  the  prejudice  of  the  interests  of  the  agricultural  class.^ 

Occupation  taxes  constituted  22.9  per  cent  of  the  assessed  taxes 
in  1880,  as  compared  with  16.8  per  cent  in  1875  and  17.1  per 
cent  in  1879.  The  taxes  on  liquor  amounted  to  50.1  per  cent 
of  the  total  occupation  taxes  in  1880,  and  the  special  corporation 
taxes  constituted  only  4.3  i:)er  cent  of  the  total.     The  receipts 


^This  tax  was  urged  by  Governor  Roberts  in  a  special  financial  mes- 
sage, January  29,   1879. 

=*Laws   of  1879,  Spec.   Sess.,  p.   39.     Galveston  News,   June  15,  1879. 

'^Inaugural  address  of  Governor  Roberts,  January  21,  1879.  The  jus- 
tification for  the  passenger  tax  urged  by  the  governor  was  the  theo- 
retically unsound  one  that  the  state  provided  protection  to  travelers. 


A  Financial  Hist  or  ij   of  Texas  1J19 

from  corporation  taxes  would  have  been  larger  had  not  the 
Western  Union  Telegraph  Company  contested  the  law  apply- 
ing to  it  on  the  ground  that  it  taxed  interstate  messages,  and  this 
contention  was  sustained  by  the  Supreme  Court  of  the  United 
States.^ 

C.     The  Poll  Tax. 

Section  1  of  article  8  of  the  Constitution  of  1876  provides 
that  ''the  legislature  may  impose  a  poll  tax",  and  section  3  pro- 
vides that  "there  shall  be  set  apart  annually  a  poll  tax  of  $1  on 
all  male  inhabitants  in  this  state  between  the  ages  of  21  and  60 
years,  for  the  benefit  of  the  public  free  schools."  The  age  limits 
were  the  same  as  had  been  adopted  for  the  tax  of  the  preceding 
period.  Until  1876  the  tax  was  $1,  one-fourth  of  the  proceeds 
of  which  went  to  the  available  school  fund,  but  in  1876  the  tax 
was  increased  to  $2,  $1  of  which  was  foi-  the  school  fund  and  $1 
for  the  general  revenue  fund.  The  only  persons  within  the  tax- 
able age  limits  who  were  exempt  were  Indians  and  the  insane. 
In  1879  the  blind  and  persons  who  had  lost  the  use  of  one  or 
both  of  their  hands  or  feet  were  added  to  the  exempted  class. 
There  was  great  laxity  in  the  payment  of  the  poll  tax,  real  estate 
owners  being  practically  the  only  ones  who  paid  it.^  The  at- 
tempt was  made  in  1879  to  have  an  amendment  to  the  constitu- 
tion submitted  which  would  make  the  payment  of  the  tax  pre- 
requisite to  voting.  The  joint  resolution  proposing  this  passed 
only  *he  house  of  representatives,  and  it  would  have  been  lost 
there  if  the  negro  member  from  Brazos  County  had  not  changed 
from  the  opposition  upon  being  assured  that  the  people  would 
have  to  vote  upon  it  before  it  could  be  adopted.^  It  was  pro- 
vided in  1879  that  real  and  personal  property  should  be  liable 
for  all  state  and  county  taxes,  including  the  poll  tax.*    As  show- 


^Western  Union  Telegraph  Company  v.  State  of  Texas,  105  U.  S., 
560  (1881).     See  also  55  Tex.,  314  (1881). 

^Houston  Daily  Telegraph,  January  29,  1875.  Inaugural  address  of 
Governor   Roberts,    January   21,    1879. 

^Galveston  News,   March  14,   1879. 

*Laws  of  1879,  p.  46. 


220  Bulletin  of  the   University  of  Texas 

ing  the  amount  of  evasion,  the  total  polls  assessed  in  1881  were 
287,723  as  compared  with  a  census  male  population  within  the  tax- 
able age  limits  of  356,627  in  1880.  As  the  insane,  blind,  prisoners 
and  those  in  almshouses  of  both  sexes  and  all  ages  numbered 
only  4,788,  exemption  does  not  begin  to  explain  the  difference 
between  the  number  assessed  and  the  number  assessable.  The 
showing  for  the  tax  is  worse  when  to  evasion  through  escape  of 
assessment,  there  is  added  evasion  through  failure  to  pay  the  tax 
assessed.  In  1881  the  percentage  of  non-payment  of  the  tax 
assessed  was  32.1. 

2).    Miscellaneous  Receipts. 

Miscellaneous  receipts  were  mainly  from  fees,  interest  on  in- 
vestments, and  land  sales.^  The  bulk  of  the  fee  revenues  came 
to  the  general  land  office  for  work  done  by  it  in  connection  with 
the  administration  of  the  public  lands.  The  fees  collected  by 
the  other  departments  of  the  state  government  were  insignificant. 
There  were  no  corporation  charter  fees  imposed  before  1879,  but 
in  that  year  fees  of  $100  for  railroad,  telegraph,  and  street  rail- 
way charters,  $25  for  charters  of  other  business  corporations, 
and  $5  for  charters  for  other  than  business  corporations  were 
fixed  and  made  payable  to  the  secretary  of  state.^ 

The  amount  derived  from  interest  on  investments  was  a  growing 
one.  The  interest  from  investments  which  constituted  a  net  addi- 
tion to  the  state 's  revenue  was  derived  from  the  railroad  bonds  held 
by  the  school  fund  and  the  United  States  bonds  and  land  notes 
held  by  the  school,  university,  and  asylum  funds.  The  Consti- 
tution of  1876  limited  the  investment  of  the  special  funds  to 
United  States  and  Texas  bonds.     The  former  were  to  be  invested 


^The  proceeds  of  land  sales  by  permanent  funds,  such  as  the  per- 
manent school  fund,  are  not  included  among  receipts  along  with  taxes, 
fees,  interest  and  the  like,  but  are  separately  stated.  Such  permanent 
funds  are  of  the  nature  of  capital  accounts,  their  receipts  from  lands 
being  subject  only  to  investment  and  reinvestment  in  bonds,  the  inter- 
est alone  on  such  investments  being  applicable  to  current  expenditures. 
There  was  no  division  of  the  university  fund  into  an  available  and  a 
permanent  fund  which  makes  it  necessary  to  include  its  receipts  from 
lands   among  other  revenues   of  an  active   character. 

=Laws  of  1879,  p.  12. 


A  Financial  History  of  Texas  221 

in  only  when  State  of  Texas  bonds  were  not  obtainable,  whereas 
under  the  Constitution  of  1869  only  United  States  bonds  could 
be  invested  in.^  The  refunding  operations  of  the  national  gov- 
ernment during  this  period  made  state  bonds  more  desirable  than 
Federal  bonds,  their  interest  being  higher  and  their  premium 
beiuR:  lower. 


^Art.  8,  sees.  4,  9,  and  11. 


Chapter  4. 


PUBLIC  LANDS. 


The  legislation  of  April,  1874,  provided  for  the  sale  of  the 
school,  university  and  asylum  lands.^  Preference  in  purchase 
was  accorded  actual  settlers,  they  being  given  six  months  from 
the  date  of  the  act  within  which  to  make  application  to  purchase. 
Settlement  on  the  asylum  and  university  lands  was  required  with- 
in six  months,  and  on  the  school  lands  within  twelve  months.  It 
was  provided  that  if  the  university  lands  were  not  purchased  by 
actual  settlers  they  should  be  open  to  purchase  by  non-settlers. 
The  maximum  amount  of  land  purchasable  was  160  acres,  except 
that  there  was  no  limit  to  university  lands  purchasable  by  persons 
who  were  not  actual  settlers.  The  minimum  purchasable  was  80 
acres,  except  that  it  was  160  acres  for  purchasers  of  university 
lands  who  were  not  actual  settlers.  The  minimum  value  placed 
on  all  the  lands  was  $1.50  an  acre,  and  appraisal  of  their  value 
by  local  commissioners  was  prescribed.  One-tenth  of  the  pur- 
chase price  was  payable  down,  the  remainder  in  installments  of 
one-tenth,  with  interest  at  10  per  cent.  The  acts  of  1874  pro- 
viding for  the  sale  of  the  school,  university  and  asylum  lands 
were  in  effect  until  1879. 

While  the  laws  contemplated  sale  to  actual  settlers,  they  were 
not  drawn  so  as  to  insure  this.  They  were  otherwise  defective.^ 
Purchasers  were  able  to  enter  into  possession  of  land  by  making 
a  first  payment,  and  often  valuable  timber  lands  belonging  to 
the  school  fund  were  stripped  and  abandoned  before  purchase 
was  completed.^ 

The  public  land  not  held  by  the  special  funds  and  which  w^as 
vacant  and  unappropriated  was  not  on  the  market  before  1879, 
but  was  open  to  homestead,  railroad,  and  other  scrip  claimants. 
Throughout  this  period  each  head  of  a  family  without  a  home- 
stead was  entitled  under  the  usual  conditions  of  three  years 


^Laws   of   1874,   pp.   72,   142,  146.     Laws  of   1876,   p.   75. 

=^Land  Office  Report,  1877,  p.  3.     Ibid.,  1878,  p.  3.     Ibid.,  1896-8,  p.  15. 

'Ibid.,  1878. 


r 


A  Financial  History  of  Texas  223 

settlement  and  payment  of  fees  to  160  acres,  each  single  man  to 
80  acres  of  public  land.^  New  railroads  received  grants  at  the 
rate  of  sixteen  sections  per  mile.^  Grants  were  made  somewhat 
liberally,  it  not  wastefully  for  the  improvement  of  rivers  and 
bayons,  and  for  the  construction  of  canals  and  ditches.^ 

The  Constitution  of  1876  (Art.  14,  sec.  4)  prohibited  the  sale 
of  certificates  of  land  at  the  land  office  except  to  actual  settlers, 
and  the  amount  purchasable  was  limited  J:o  160  acres.  The  Re- 
vised Statutes  of  1879  (Art.  3924)  granted  to  the  actual  settler 
the  right  to  purchase  up  to  160  acres,  but  the  right  of  preemption 
could  not  be  acquired  by  one  who  has  already  the  owner  of  land.* 

1879  ended  the  purely  developmental  policy  of  administering 
the  unappropriated  public  lands.  The  unappropriated  lands  in 
the  Panhandle  counties  and  scrap  lands  in  organized  counties 
were  appropriated,  first,  to  the  amount  of  3,050,000  acres  to  the 
erection  of  a  state  capitol ;  second,  to  the  payment  of  the  public 
debt ;  and,  third,  to  the  increase  of  the  endowment  of  the  school 
fund.^  The  minimum  price  fixed  on  these  lands  was  fifty  cents 
an  acre.  This  price  while  not  too  little  at  the  time  for  the  land 
on  the  frontier  was  below  the  value  of  the  scrap  land.^  The  land 
legislation  of  1879  shows  small  results  until  after  1880.  The 
receipts  under  the  fifty  cents  act  were  only  $5,718.77  up  to  Sep- 
tember 1,  1880. 

The  receipts  from  sales  of  land  belonging  to  the  school,  uni- 
versity and  asylum  funds  were : 

1874   .......$  1,572.46- 

1875   39,843.89 

1876   125,546.78 

1877-8 203,745.89 

1879-80 254.241.89 

Total u  . . . .  .$624,950.91 

^Constitution  of  1876,  art.  14,  sec.  6.  Laws  of  1876,  p.  197. 

-Constitution  of  1876,  art.  14,  sec.  3.  Laws  of  1876,  p.  153. 

^Laws  of  1874,  p.  169.     Ibid.,  p.  185.  Laws  of  1875,  p.  22.     Ibid.,  p.  77. 

^Sayles,    op.   cit.,   p.   2^7.     Gambrell  v.   Steele,   55    Tex.,    582    (1881). 
'^Constitution  of  1876,  art.  16,  sec.  57.     Laws  of  1879,  pp.  9,  11.     Laws 
of  1879,  Spec.  Sess.,  p.  48. 

«Land  Office  Report,   1879-1880. 


224  Bulletin  of  the  University  of  Texas 

Over  one~half  of  the  receipts,  or  $322,450,  wa^  from  sales  of 
university  lands  set  apart  in  1839  and  lying  in  Callahan,  Collin, 
Cooke,  Fannin,  Grayson,  Hunt,  Lamar,  McLennan,  and  Shackel- 
ford counties. 


Chapter  5. 

SCHOOL    AND    UNIVERSITY    FUNDS. 

Diirin":  this  period  there  existed  the  same  division  of  the 
school  fund  into  a  permanent  and  an  available  fund  which  had 
been  made  in  1870.  The  principal  of  the  bonds  and  other  funds 
and  the  principal  of  the  proceeds  from  the  sale  of  school  lands 
constituted  the  permanent  fund;  the  interest  on  the  investment 
of  the  permanent  fund  and  a  share  of  the  taxes  made  up  the 
available  fund,  and  was  the  amount  which  was  applicable  an- 
nually to  the  support  of  the  public  free  schools.^  These  funds 
could  not  be  appropriated  to  any  other  purpose.  The  Constitu- 
tion of  1869  set  apart  to  the  school  fund  the  lands  and  other 
funds  theretofore  given  to  it,  the  proceeds  of  all  public  land 
sales,  one-fourth  of  the  annual  revenue  from  general  taxation, 
and  the  full  revenue  from  an  annual  poll  tax  of  $1.-  The  Con- 
stitution of  1876  gave  to  it  the  ''funds,  lands,  and  other  prop- 
erty heretofore  set  apart  and  appropriated  for  the  support  of 
public  schools ;  all  the  alternate  sections  of  land  reserved  by  the 
state  out  of  grants  heretofore  made  or  that  may  hereafter  be 
made  to  railroads  or  other  corporations  of  any  nature  w^hatsoever ; 
one-half  of  the  public  domain  of  the  state."  This  was  consti- 
tuted the  permanent  fund  and  the  income  from  it  and  ''not 
more  than  one-fourth  of  the  general  revenue  of  the  state,  and  a 
poll  tax  of  $1"  w^as  defined  to  be  the  available  fund.^ 

The  permanent  fund  had  in  bonds  and  cash  on  August  31, 
1874,  $2,563,313;  on  August  31,  1880,  $3,542,126.  Included  in 
these  amounts  were  $402,535  of  state  bonds  of  doubtful  validity 
and  the  railroad  bonds  without  any  deduction  of  the  sinking 
fund.  The  increase  between  1874  and  1880  was  due  principally 
to  the  sales  of  school  lands  and  to  the  recovery  in  1876  of  some 
of  the  United  States  bonds  which  had  been  taken  from  the  fund 
during  the  w^ar  and  put  at  the  disposal  of  the  Military  Board. 
The  bonds  were  sold  for  $339,240,  which  amount  less  commis- 


'Constitution  of  1876,  art.  7,  sec.  5. 

*Art.   9,  sec.   6. 

•Art.  7,  sees.  2  and  3. 

15— H 


"226  Bulletin  of  the   Vniversitij  of  Texas 

■sions  of  $39,216  on  contracts  for  recovery,  netted  $300,023. 
Neither  the  permanent  fund  nor  the  available  fund  benefited  to 
any  large  extent  from  the  public  lands.  The  total  receipts  to 
the  permanent  fund  from  land  sales  were  during  the  six  years 
ending  August  31,  1880,  only  $251,089,  while  the  available  fund 
received  as  interest  on  land  notes  only  $61,695.  Nothing  was 
derived  from  the  lease'  of  school  lands,  but  the  millions  of  acres 
belonging  to  the  fund  afforded  free  pasture  to  vast  herds  of 
cattle.  In  1879  a  rental  of  $25  per  section  was  fixed  for  any 
one  enclosing  any  of  the  public  lands  and  using  them  to  the  ex- 
elusion  of  the  public;  but  this  barely  touched  the  policy  of  ''free 
•grass. ' ' 

Until  1880  the  available  fund  received  the  maximum  share 
of  one-fourth  of  the  general  revenue.  The  continuous  deficits 
in  the  general  revenue  fund  resulted  in  1879  in  an  agitation 
which  charged  the  school  fund  as  the  cause  of  the  deficit,  and  a 
decided  effort  was  made  in  the  regular  session  of  the  Sixteenth 
Legislature  to  reduce  the  share  during  1880  and  1881  to  either 
one-sixth  or  one-eighth  of  the  revenues.^  Neither  branch  of  the 
legislature  was  willing  to  meet  the  public  with  such  a  reduction, 
Tiowever,  and  it  remained  for  the  governor  to  veto  the  item  ap- 
propriating one-fourth.  At  the  special  session  though,  in  1879, 
one-sixth  of  the  ad  valorem  and  occupation  tax  receipts  was  ap- 
propriated.2  It  was  contemplated,  of  course,  that  this  reduction 
should  be  only  temporary.^ 

The  per  capita  apportionments  from  the  available  fund  were 
as  follows : 

Total. 

1874  $1.95— $499,800 

1875 1.59 

1876 1.47 

1877 2.82 

1878 4.50 

1879 4.25 

1880 3.00— $679,317 


^Message    of    Governor    Roberts,    January    29,    1878. 

=^Laws  of  1879,  p.  44. 

'The  deficiency  argument  was  joined  with  the  appeal  to  popular 
prejudice  that  the  school  system  was  a  child  of  the  Reconstruction  era. 
See  Galveston  News,  March  18,  20,  21,  and  30;  April  11,  19,  and  24; 
and   May  7,  8,  and  15,  1879. 


A  Financial  History  of  Texas  227 

There  were  warrants  outstanding  against  the  available  fund 
on  August  31,  1874,  of  $104,577 ;  on  August  31,  1875,  of  $384,- 
838,  and  there  was  also 'a  large  unascertained  amount  of  un- 
audited claims  of  school  teachers  for  services  rendered  prior  to 
July  1,  1873.  In  1874  $400,000  of  the  available  fund  not  other- 
wise appropriated  was  appropriated  to  the  payment  of  the 
teachers'  claims,  and  it  was  provided  that  teachers'  warrants 
registered  by  the  comptroller  should  draw  8  per  cent  interest 
or  should  be  fundable  into  school  bonds.^  No  school  bonds  were 
authorized,  and  these  claims  dragged  on.  The  Constitution  of 
1876  provided  that  the  legislature  should  either  pay  or  fund 
them,  and  by  the  bond  act  of  July  6,  1876,  their  payment  out 
of  the  proceeds  of  the  bond  sales  was  authorized.-  The  amount 
paid  on  their  account  was  through  1883,  $404,536,  and  an  addi- 
tional appropriation  of  $15,000  was  made  in  1883.  Claims  con- 
tinued to  appear  long  after  this  date. 

Little  support  from  the  general  treasury  was  given  to  higher 
education  during  this  period.  The  Constitution  of  1876  called 
for  the  establishment  as  soon  as  practicable  of  a  state  university 
and  of  a  branch  university  for  the  instruction  of  negroes,  but 
provided  that  no  tax  should  be  levied  and  no  money  appropri- 
ated out  of  the  general  revenue,  either  for  the  university  for 
negroes  or  for  buildings  for  the  University  of  Texas.^  It  called 
for  an  immediate  appropriation  of  $40,000  for  the  completion 
of  the  buildings  and  the  furnishings  of  the  Agricultural  and  Me- 
chanical College.*  Provision  was  made  in  1876  for  the  establish- 
ment of  a  negro  agricultural  and  mechanical  college,  but  in  1879 
tiiis  project  was  replaced  by  one  for  a  negro  normal  school.  The 
Sam  Houston  Normal  Institute  for  whites  was  provided  for  in 
1879.  The  support  of  the  negro  normal,  $6,000  a  year,  devolved 
upon  the  university  fund;  the  support  of  the  white  normal, 
$14,000  a  year,  upon  the  available  school  fund.  Nothing  was 
done  towards  the  establishment  of  a  state  university.  The  Con- 
stitution of  1876  repealed  the  valuable  grant  made  to  the  Uni- 


^Laws  of  1874,  p.  149. 

'Constitution  of  1876,   art.  16,  sec.  36.     Laws  of  1876,  p.  40.     Comp- 
troller's Report,  1875.     Message  of  Governor  Coke,  April  19,  1876. 
^Art.  7,  sees.  10  and  14. 
*Art.  7,  sec.   13. 


228  Bulletin  of  the   University  of  Texas 

versity  of  one-tenth  of  the  alternate  sections  of  lands  donated 
to  railroads  by  the  act  of  1858,  but  gave  one  million  of  the  un- 
appropriated lands  as  a  substitute  land  endowment.  The  new 
lands  given  were  located  in  the  western  part  of  the  state  and 
were  not  as  valuable  as  the  lands  taken  away.^  Suit  was  also 
brought  during  this  period  which  resulted  in  the  loss  to  the  uni- 
versity fund  of  valuable  land  in  McLennan  County. 

Though  the  state  itself  was  doing  little  for  education,  the 
counties  and  minor  civil  divisions  were  doing  nothing.  There 
was  no  taxation  by  school  districts,  and  only  $1,994  of  local 
school  taxes  were  collected  in  1879.  At  the  same  time  24.1  per 
cent  of  the  population  ten  years  of  age  and  over  was  unable  to 
read,  and  29.7  per  cent  was  unable  to  write.  The  negro  element 
was  responsible  for  these  large  percentages,  as  75.4  per  cent  of 
the  negroes  ten  years  of  age  and  over  was  unable  to  write,  while 
the  percentage  for  the  whites  was  15.3.- 


^Message  of  Governor  Roberts,  April  6,  1882. 

=Tenth  Census  of  the  United  States.    Vol.  Population,  p.  919. 


Chapter  6. 
public  debt. 

The  public  debt  constituted  the  liveliest  of  the  period's 
financial  problems..  When  the  Coke  administration  succeeded 
the  Davis  on  January  14,  1874,  the  general  revenue  account 
was  confronted  with  estimated  demands  of  $1,236,116  before 
the  end  of  the  fiscal  year  and  with  estimated  receipts  from 
taxes  of  only  $481,714.  The  amount  of  cash  in  the  treasury 
was  only  $36,178,  and  there  was  owing  to  the  available  school 
fund  for  its  share  of  the  general  revenue  about  $60,000.  The 
available  school  fund  was  in  an  equally  critical  condition;  its 
balance  on  hand  was  $157,603,  but  this  was  below  its  require- 
ments, and  the  fiscal  year  closed  with  warrants  outstanding, 
or  a  deficit,  of  $104,577,  and  with  unaudited  claims  of  school 
teachers  for  more  than  $400,000.  State  warrants  were  hawked 
about  for  sixty  and  seventy  cents  on  the  dollar,  reflecting  the 
low  ebb  of  the  state's  credit/ 

There  were  three  courses  open  for  meeting  the  exigency; 
namely,  the  levying  of  a  sufficient  tax  .to  pay  the  outstanding 
floating  debt,  the  sale  of  bonds,  or  the  funding  of  the  floating 
debt.  The  course  favored  by  the  governor  was  to  cut  off  the 
warrants  issued  before  January  14,  1874,  from  payment  out  of 
the  current  revenues  and  to  fund  them.  All  three  expedients 
''were  resorted  to.  By  the  act  of  March  4,  1874,  the  issue  of 
bonds  to  the  amount  of  $1,000,000,  bearing  7%  interest  and 
payable  thirty  years  from  January  1,  1874,  was  authorized, 
and  it  was  provided  that  their  proceeds  should  be  applied 
exclusively  to  the  payment  of  warrants  drawn  between  Janu- 
ary 1.  1866,  and  January  15,  1874,  and  of  warrants  since  drawn 
on  account  of  indebtedness  incurred  between  these  dates.-  Such 
warrants  could  be  registered  and  draw  8%  interest,  and  w^re 
receivable  at  par  in  payment  for  any  bonds  of  the  state.    The 


^Message  of  Governor  Coke,  February  10,  1874. 

=Laws  of  1874,  p.  14.  The  original  act  did  not  specify  in  what  kind 
of  money  the  interest  and  principal  should  be  payable,  but  two  amend- 
atory acts  stipulated  gold. 


230  Bulletin  of  the   Universiti/  of  Texas 

bonds  authorized  were  sold  to  private  investors  in  1874  and 
1875  at  85  and  86  cents  on  the  dollar.  The  gross  amount 
realized  was  $851,465,  which,  less  selling  commissions  of 
$17,029,  netted  $834,436/ 

In  addition  to  the  above  issue,  there  was  authorized  the  sale 
of  $400,000  of  the  frontier  defense  bonds,  as  the  7%  20-40  year 
bonds  of  the  act  of  August  5,  1870,  were  called,  and  $500,000 
of  the  7%  20  year  revenue  deficiency  bonds  of  the  act  of 
December  2,  1871.'-  The  proceeds  of  the  sale  of  these  two  bond 
issues  were  applied  to  the  payment  of  Williams  and  Guion,  of 
New  York,  with  whom  one  hundred  and  fifty  of  the  bonds  had 
been  hypothecated  by  the  Davis  administration,  and  the  balance 
was  turned  over  to  the  general  revenue  fund.  These  bonds 
were  sold  to  private  investors,  the  frontier  defense  ones  bring- 
ing from  85  to  92.5  cents  on  the  dollar,  the  revenue  deficiency 
ones  from  85  to  95  cents.  The  gross  amount  realized  from  the 
$900,000  sale  was  $799,671 ;  commissions  of  $15,993  were  paid, 
leaving  $783,678  net.  By  the  three  7%  bond  sales  authorized 
by  the  two  acts  of  March  4,  1874,  a  total  of  $1,900,000  was 
added  to  the  bonded  debt;  the  gross  amount  received  was 
$1,651,137,  or  an  average  of  86.9  cents  on  the  dollar ;  commis- 
sions paid  at  the  rate  of  2%  amounted  to  $33,032 ;  the  net 
amount  received  was  $1,618,114,  or  85.1  cents  on  the  dollar.^ 
The  net  proceeds  of  the  sales  were  disposed  of  as  follows: 
$607,357  to  the  payment  of  warrants  on  account  of  indebted- 
ness incurred  prior  to  January  15,  1874,  excluding  the  warrants 
outstanding  against  the  available  school  fund;  $354,562  to 
Williams  and  Guion;  $653,752  to  the  general  revenue  fund  to 
meet  current  expenses;  and  $2,665  to  legal  expenses,  express 
charges  and  miscellaneous. 

The  addition  to  the  public  debt  made  by  the  above  bond 
issues  is  unquestionably  chargeable  in  large  measure  to  the 
Reconstruction  administration.  There  has  been  a  disposition 
to  charge  to  it  also  the  large  bonded  debt  incurred  on  account 


'House  Journal,  15th  Leg.,  p.  166, 

^Laws  of  1874,  p.  16. 

•'House  Journal,  16th  Leg.,  Reg.  Sess.,  p.  803.  The  proceeds  were  in 
depreciated  greenbacks.  In  gold  the  net  proceeds  were  equivalent  to 
$1,451,842.     Galveston   News,   April   20,  1876. 


A  Financial  History  of  Texas  231 

of  pensions.  The  legislatnre  of  1870  granted  very  liberal  pen- 
sions to  the  veterans  of  the  Texas  Revolution,  but  Governor 
Davis  vetoed  the  items  in  the  appropriation  bill  for  1871  and 
1872.  By  an  act  of  April  21,  1874,  the  pension  act  was  repealed 
and  it  was  provided  that  all  arrearages  of  pensions  due  under 
the  act  up  to  July  1,  1874,  should  be  paid  in  state  bonds,  bear- 
ing 10%  interest,  payable  20  years  after  date,  but  redeemable 
at  the  pleasure  of  the  state  within  five  years.^  By  1879,  $1,115,,- 
009  of  the  pension  bonds  and  $18,610  of  certificates  convertible 
into  bonds  were  outstanding,  making  a  total  debt  on  this 
account  of  $1,133,619. 

The  funding  of  the  floating  indebtedness  was  also  resorted 
to  as  a  means  of  relieving  the  pressure  upon  the  treasury.  .  The 
act  of  May  30,  1873,  which  authorized  the  issue  of  one-half 
million  dollars  of  10%  funding  bonds,  was  amended  so  as  to 
provide  for  bonds  of  denominations  other  than  $100,  for  coupon 
instead  of  registered  bonds,  and  for  funding  the  interest  on. 
warrants  as  well  as  the  warrants  themselves.-  There  were 
$89,800  of  the  1873  bonds  outstanding  on  August  31,  1874,  and: 
their  exchange  for  the  new  issue  was  authorized,  and  all  but 
$4,400  were  exchanged.  New  bonds  to  the  amount  of  $413,600 
were  issued,  making  a  total  outstanding  on  August  31,  1876, 
of  $503,400.'^  These  bonds  were  payable  ten  years  after  Janu- 
ary 1,  1874,  but  were  redeemable  at  the  pleasure  of  the  state 
at  any  time  after  three  years  from  their  date. 

The  important  feature  of  debt  legislation  in  1875  was  the 
^-settlement  of  the  International  Railroad  bond  subsidy  contro- 
versy. The  question  of  the  subsidy  was  reopened  by  the  legis- 
lature immediately  upon  convening  in  1875  by  the  introduction 
in  the  senate  of  a  bill  which  would  limit  the  subsidy  to 
$3,000,000.  This  bill  passed  the  senate  by  the  narrow  vote  of 
14  to  12.*     In  the  house  of  representatives  there  were  amend- 


^Laws  of  1874,  p.  117. 

^Act  of  May  2,  1874;  Laws  of  1874,  p.  207. 

"Warrants  received  for  funding  aggregated  for  the  years  1874.  1875, 
and  1876,  $505,985.45;  cash  received  in  order  to  make  even  amounts 
of  bonds,  $1,190.98.  There  were  also  martial  law  certificates  to  the 
amount   of    $2,813    received    in    the    collection    of   taxes   and    canceled. 

■■Senate  Journal,  14th  Leg.,  Second  Sess.,  pp.  104,  155,  204,  217,  and  226. 


232  Bulletin  of  the   University  of  Texas 

ments  made  which  would  require  the  company  to  purchase 
$320,000  of  state  bonds  and  to  pay  annually  2%  of  its  gross 
earnings  until  the  payments  with  other  taxes  should  equal  the 
principal  and  interest  of  the  subsidy  bonds.^  The  senate  con,- 
curred  in  the  amendments  and  the  bill  went  to  the  governor. - 
There  was  a  feeling  of  uncertainty  as  to  w^hat  the  governor 
would  do,  but  it  was  settled  shortly  by  his  veto. 

Western  Texas  took  a  vital  interest  in  the  construction  of  the 
road,  which  caused  strong  resentment  to  be  expressed  against  the 
legislature  and  the  governor,  and  the  old  talk  of  dividing  the 
state  to  be  revived.^  Consideration  of  the  interests  of  the  west- 
ern section  and  of  the  railway  company  led  finally  to  a  settle- 
ment; of  the  controversy  whereby  the  company  received  twenty 
sections  of  land  per  mile  of  road  and  exemption  from  all  state, 
county,  city,  and  other  taxes  for  a  period  of  twenty-five  years.* 

The  possession  of  a  vast  public  domain  thus  enabled  the  state 
to  escape  a  public  debt  in  aid  of  internal  improvements  which 
would  have  proved  very  burdensome  at  this  time  in  its  financial 
history.  To  guard  against  a  debt  of  this  character  in  the  future 
the  Constitution  of  1876  forbade  the  legislature  "to  give  or  to 
lend,  or  to  authorize  the  giving  or  lending,  of  the  credit  of  the 
state  in  aid  of,  or  to,  any  person,  association  or  corporation, 
whether  municipal  or  other ;  or  to  pledge  the  credit  of  the  state  in 
any  measure  whatsoever,  for  the  payment  of  the  liabilities,  present 
or  prospective,  of  any  individual,  association  of  individuals, 
municipal  or  other  corporation  whatsoever."^     The  Constitution 


^House  Journal,  14th  Leg.,  Second  Sess.,  pp.  380,  406,  407,  415,  422,  436. 

-Ibid.,  p.  487.  The  reasons  given  for  the  veto  were  (1)  that  if 
the  intention  of  the  bill  was  to  use  the  proceeds  of  the  state  bond 
purchases  by  the  railroad  company  to  pay  the  interest  on  the  subsidy 
bonds,  the  bill  required  a  two-thirds  majority;  (2)  that  the  payment 
annually  of  2  per  cent  of  the  gross  earnings  was  a  mere  pittance  as 
compared  with  the  interest  on  the  bonds;  (3)  that  the  people  were 
over-taxed;  and  (4)  that  the  original  act  was  unconstitutional. 

^'San  Antonio  Daily  Herald,  March  3,  6,  and  8,  1875.  The  governor 
was  bitterly  assailed  as  a  "time  server"  and  as  being  entitled  to  the 
•"ineffable  scorn  and  loathing  of  the  people  of  Western  Texas." 

'Senate  Journal,  14th  Leg.,  Second  Sess.,  p.  503.  Special  Laws,  1875, 
p.  69.  The  International  Railroad  became  later  the  International  and 
Great   Northern. 

''Art.  3,  sec.  50. 


A  Financial  History  of  Texas  233 

of  1869  did  not  contain  such  a  prohibition,  nor  did  it  put  any 
limit  on  the  debt  creating  power  of  the  legislature,  except  that 
it  should  provide  adequate  means  for  the  payment  of  current 
interest  and  a  2  per  cent  sinking  fund.^  The  Constitution  of 
1876,  however,  did  not  enjoin  any  sinking  fund,  but  it  limited 
the  debt  which  might  be  created  at  any  time  to  supply  casual 
deficiencies  in  the  revenue  to  $200,000,  and  confined  the  creation 
of  debt  to  this  purpose  and  to  repel  invasion,  suppress  insurrec- 
tion, defend  the  state  in  time  of  war,  and  pay  pre-existing  debt.- 

The  maturing  of  bonds  in  1876  and  1877,  the  desirability  of 
replacing  bonds  bearing  10  per  cent  interest  with  bonds  bearing 
lower  interest,  the  existence  of  floating  claims  of  long  standing, 
and  the  persistent  recurrence  of  deficiencies  in  the  ordinary 
revenues,  made  necessary  some  debt  legislation  in  1876.  The  act 
of  July  6,  1876,  authorized  the  issue  of  $1,675,000,  6  per  cent 
gold  bonds,  payable  thirty  years  from  July  1,  1876.  It  was  pro- 
vided that  $800,000  should  be  coupon  bonds,  $875,000  registered, 
and  that  none  should  be  sold  below  par.^ 

The  disposition  of  the  proceeds  of  the  issue  was  stipulated  in 
the  act.  The  holder  of  any  of  the  claims  for  the  payment  of 
which  the  act  provided  was  authorized  to  exchange  them  for 
bonds  at  the  current  market  value  of  the  bonds,  but  at  not  less 
than  par.  In  order  to  aid  the  floating  of  this  issue,  the  legis- 
lature authorized  first  the  sale  of  the  United  States  bonds  held 
by  the  permanent  school  fund  and  the  investment  of  the  pro- 
ceeds in  state  bonds,  and,  second,  the  investment  of  certain  funds 
of  the  Agricultural  and  Mechanical  College  in  state  bonds.  The 
■'legislature  required  the  investment  of  the  proceeds  of  the  sale 
of  university  lands  in  the  bonds."^ 

^Art.  12,  sec.  23. 

-Art.  3,  sec.   49. 

^Laws  of  1876,  p.  40.  This  legislation  was  recommended  by  Gov- 
ernor Coke  in  his  message  of  April  19,  1876,  and  the  bill  was  reported 
by  the  house  finance  committee.  May  30,  1876;  Galveston  News,  May 
31,  and  July  1,  1876. 

*Laws  of  1875,  pp.  38,  44,  216,  283.  A  minority  of  the  house  finance 
committee  dissented  against  the  bill  to  sell  the  United  States  bonds 
on  the  ground  that  it  consulted  only  the  exigency  of  the  state  treasury; 
Galveston  News,  July  4,  1876.  The  sale  was  a  fortunate  one,however, 
for  they  were  sold  at  a  premium  of  $81,741,  which  premium  would 
have  been  lost  because  the  bonds  were  called  for  payment  by  the 
United  States  Treasury  on  December  1,  1876. 


234  Bulletin  of  the   University  of  Texas 

By  August  31,  1880,  $1,647,000  of  the  6  per  cent  bonds  had 
been  issued,  and  this  remained  the  total  amount  except  for  $1,- 
000  added  in  1881-2/  The  bonds  were  sold  as  follows:  $500,000 
to  the  American  Exchange  National  Bank  of  New  York  at  IO2V2 ; 
the  balance,  or  $1,147,000,  to  the  special  funds,  the  permanent 
school  fund  taking  $945,000,  the  university  land  sales  fund, 
$167,000,  and  the  Agricultural  and  Mechanical  College  fund, 
$35,000.  The  special  funds  paid  par  for  all  bonds  purchased, 
except  that  the  university  fund  paid  for  45  and  the  permanent 
school  fund  for  one  at  the  rate  of  1021/2.  The  total  realized  on 
the  $1,647,000  was  $1,660,650,  or  a  premium  of  $13,650.^  The 
proceeds  of  sale  were  disposed  of  as  follows:  $100,000  in  1876 
and  $101,125  in  1877  to  the  general  revenue  fund  to  meet  or- 
dinary deficiencies;  $19,999.92  in  payment  of  10  per  cent  war- 
rants issued  prior  to  January  28,  1861;  $59,797.84  in  payment 
of  certificates  of  debt  issued  by  the  auditorial  boards  of  1866 
and  1871;  $45,280  in  payment  of  interest  on  state  bonds  held 
by  the  Agricultural  and  Mechanical  College;  $42,721.29  in  pay- 
ment of  warrants  outstanding  on  the  general  revenue  fund; 
$376,2^3  in  payment  of  warrants  drawn  in  favor  of  school 
teachers  for  services  prior  to  July  1,  1873 ;  $279,000  in  payment 
of  10  per  cent  revenue  deficiency  bonds  due  July  1,  1876 ;  $125,- 
000  in  payment  of  the  6  per  cent  Throckmorton  bonds  due  Jan- 
uary 1,  1877;  $503,400  in  payment  of  the  10  per  cent  funding 
bonds  of  1873  and  1874,  retirable  at  pleasure  on  and  after  Jan- 
uary 1,  1877.  The  total  of  the  proceeds  thus  disposed  of  was 
$1,652,547.^ 

This  bond  issue  represented  in  the  main  onl.y  a  change  in  the 

'As  $1,000  were  redeemed  in  1881-2,  the  total  outstanding  until  re- 
tirement was  $1,647,000. 

'House  Journal,  16th  Leg.,  Reg.  Sess.,  p.  806. 

^The  balance,  or  $8,103,  is  not  traceable  in  the  reports.  Some  of 
it  went  for  commissions  on  sale,  some  for  express  charges.  Included 
in  the  amount  to  pay  certificates  of  public  debt  is  $3,000  of  bonds  trans- 
ferred in  1882-3.  Special  accounts  were  set  up  on  the  books  of  the 
treasury  in  the  name  of  the  several  objects  of  payment,  and  later 
when  the  claims  appear  to  have  all  been  out,  the  balances  were  trans- 
ferred to  the  general  revenue  account.  Balances  transferred  in  1879, 
1885,  and  1893  amounted  to  $18,743.70. 


A  Financial  History   of  Texas  235 

form  of  the  state  debt.  Only  $200,000,  or  the  par  value  of  that 
sold  to  meet  current  deficiencies  in  the  ordinary  revenue,  was  an 
addition  to  the  debt;  the  remainder,  or  $1,447,000,  merely  took 
the  place  of  maturing  bonds  and  of  unfunded  debt  whose  origin 
antedated  January  15,  1874.  The  conversion  of  the  10  per  cent 
funding  bonds  saved  the  state  $20,136  on  its  annual  interest 
charge. 

In  1879  the  opportunity  to  convert  the  10  per  cent  pension 
bonds  was  seized.  These  were  redeemable  at  the  pleasure  of  the 
state  after  July  1,  1879,  and  provision  was  made  for  their  re- 
demption by  the  act  of  April  21,  1879.^  By  this  act  $2,573,000, 
5  per  cent,  30  year  bonds,  and  $1,000,000,  4  per  cent,  20  year 
bonds  were  authorized.  It  was  provided  that  the  proceeds  of 
$200,000  of  the  bonds  should  go  to  supply  deficiencies  in  the 
current  revenues,  and  that  the  proceeds  of  the  remainder  of  the 
issues  should  be  applied  to  the  payment  of  the  outstanding  bonded 
debt,  being  applied  first  to  the  payment  of  the  pension  bonds 
and  certificates  for  pension  bonds.  Holders  of  bonds  to  be  re- 
tired were  extended  the  privilege  of  exchanging  them  for  the 
new  bonds  at  the  latter 's  market  value,  but  at  not  less  than  par; 
and  holders  of  warrants  could  fund  them  in  the  4  per  cent  bonds 
on  the  same  terms.  The  4  per  cent  bonds  were  of  the  denomina- 
tions of  $5  and  $10,  and  the  expectation  was  that  the  demand 
for  them  would  come  from  holders  of  warrants  and  small  in- 
vestors. A  total  $1,117,300  of  the  5  per  cent,  and  $4,620  of  the 
4  per  cent  bonds  were  sold  or  exchanged  in  1879  and  1880,  and 
these  remained  as  the  amount  outstanding.-  $143,700  Avere  ex- 
changed at  par  for  pension  bonds  held  by  the  special  funds,  and 
"the  remainder  of  those  issued  were  sold  to  private  investors,  re- 
alizing a  total  premium  of  only  $2,-545.    The  proceeds  were  used 


'Comptroller's  Report,  1877-8.  Message  of  Governor  Hubbard,  Janu- 
ary 14,  1879.  Message  of  Governor  Roberts,  January  29,  1879.  Laws 
of  1879,  p.  120. 

-The  4's  were  only  a  novelty,  and  those  sold  were  purchased  to 
gratify  a  fancy.  As  the  5's  were  on  the  market  the  4's  were  not 
attractive  as  an  investment.  It  was  expected  that  they  would  be  used 
to  pay  the  current  debts  of  the  state,  but  the  condition  of  the  treasury 
after  May  1,  1879,  made  this  use  of  them  unnecessary.  Message  of 
Governor  Roberts,  January  11,  1881. 


236  Bulletin  of  the   University  of  Texas 

to  take  up  pension  bonds  and  certificates  to  the  amount  of  $!,■• 
118,448  and  to  pay  $202,545  of  4  per  cent  deficiency  warrants 
issued  in  1879/  The  addition  to  the  debt  by  the  bond  issue  was 
$200,000,  which  was  the  amount  used  to  meet  deficiencies;  the 
remainder  of  the  issue  was  for  the  conversion  and  the  funding'  of 
existing  debt.  The  saving  in  the  annual  interest  effected  by  the 
conversion  of  the  10  per  cent  pension  bonds  into  5  per  cent  bonds 
was  $55,721.70. 

In  May,  1879,  the  treasury  went  on  a  cash  basis  and  there  came 
an  end  to  the  chronic  annual  deficiencies  in  the  general  revenue 
account.  Though  special  funds  were  drawn  upon  and  bonds 
were  sold  and  the  proceeds  turned  over  to  the  general  revenue 
account,  each  year  saw  a  deficit  and  the  holders  of  warrants  who 
had  not  been  able. to  anticipate  the  situation  by  charging  higher 
prices  to  the  state  had  to  bear  the  loss  of  the  discount.-  Claims 
accruing  between  September  1,  1876,  and  February  29,  1879,  on 
account  of  inadequate  appropriations,  which  includes  $30,000 
for  teachers'  services  prior  to  July  1,  1873,  were  appropriated 
for  in  1879  to  the  amount  of  $540,000,  and  it  was  provided  that 
until  paid  they  should  draw  4  per  cent  interest.  These,  except 
for  teachers'  services,  were  paid  in  1879  and  1880,'^ 

Until  the  amendment  to  the  penal  code  in  1875  making  it  a 
misapplication  of  public  money  for  any  public  officer  having 
public  money  in  his  keeping  to  purchase  state  warrants,  public 
money  was  used  for  private  speculation  by  sheriffs  and  other 
officers.*  Until  1879  the  practice  also  prevailed  at  the  treasury 
to  pay  warrants  irrespective  of  their    date    and    number,    but 


^Message  of  Governor  Roberts,  January  11,  1881.  For  act  authorizing 
deficiency  warrants  to  draw  4  per  cent  interest,  see  Laws  of  1879, 
p.  180. 

-During  1874  warrants  were  quoted  in  the  market  at  from  70  to 
97  cents  on  the  dollar;  in  1875,  from  88  to  98  cents;  in  1876,  from 
82  to  97  cents.  In  February,  1879,  they  were  selling  at  92  cents. 
Galveston  News,  December  7,  1876,  and  February  23,  1879. 

^Deficiency  warrants  were  quoted  at  85  and  86  in  August,  1879; 
and  at  93  and  93  J  in  December,  1879.  Galveston  News,  August  30, 
and   December  28,  1879. 

*Message  of  Governor  Coke,  January  12,  1875,     Laws  of  1875,  p.  11. 


A  Financial  History  of  Texas  237 

Treasurer  Lubbock  adopted  the  rule  of  payment  aeeoi'ding  to 
date  and  number.^ 

The  Constitution  of  1869  enjoined  the  establishment  of  a  sink- 
ing fund  of  2  per  cent  when  any  bonded  debt  was  authorized. 
The  only  sinking  fund  established  in  accordance  with  this  pro- 
vision was  one  for  the  frontier  defence  bonds  of  1870.  It  was  a 
•  combined  interest  and  sinking  fund,  and  an  amount  of  taxes  was 
supposed  to  be  turned  over  to  it  sufficient  to  pay  annually  the  in- 
terest on  the  bonds  and  2  per  cent  of  the  principal.  Its  receipts 
were  not  adequate  to  meet  even  all  of  the  interest  on  the  bonds, 
for  that  on  the  bonds  held  by  the  Agricultural  and  Mechanical 
College  went  overdue.  In  1874  $20,000  of  the  bonds  were  re- 
deemed and  canceled,  but  after  1874  the  fund  was  not  main- 
tained, and  it  was  closed  in  1878  and  $5,000  of  bonds  redeemed 
with  the  money  then  on  hand. 

The  Constitution  of  1876  does  not  require  that  the  establish- 
ment of  a  sinking  fund  shall  accompany  the  creation  of  a  debt. 
It  merely  states  that  the  legislature  shall  have  the  right  to  levy 
taxes  for  ^'the  benefit  of  the  sinking  fund,  which  shall  not  be 
more  than  two  per  centum  of  the  public  debt."- 

The  bond  act  of  July  6,  1876,  provided  for  the  establishment 
of  a  sinking  fund  of  2  per  cent.  This  provision,  though  man- 
datory upon  the  treasurer,  was  not  carried  out.  The  item  ap- 
peared in  the  appropriation  bills,  but  no  funds  were  reserved  in 
1876,  1877,  or  1878.  In  1879  Governor  Roberts  vetoed  the  ap- 
propriation items  of  $400,000  for  interest  and  $100,000  for  the 
sinking  fund  in  order  to  force  the  legislature  to  reduce  the  share 
of  the  general  revenue  appropriated  to  the  school  fund,  and  after 
rhis  suggestions  were  adopted  he  approved  the  debt  items.^  In 
1879  and  1880  $200,000  was  set  aside  for  the  fund,  but  it  was 
not  applied  tp  bonds,  but  to  the  payment  of  deficiency  warrants.* 


^Galveston  News,  March   12,   1879.     This  had  the  effect  of  lowering 
the  discount;  message  of  Governor  Roberts,  January  llj  1881. 
•  "Art.  3,  sec.   48. 

^Galveston  News,  April  24,  May  8,  31,  1879.  The  veto  was  not  taken 
in  the  financial  world  to  signify  a  repudiation  sentiment;  the  Commer- 
cial and  Financial  Chronicle,  vol.  28,  p.  495. 

^Message  of  Governor  Roberts,  June  10,  1879,  and  January  11,  1881. 
The  report  of  the  comptroller  for  1879  and  1880  is  confused  on  the 
sinking  fund  statement  in  that  the  fund  is  not  credited  in  1880  with 
the  $100,000  which  the  general  revenue  fund  states  was  transferred. 


238  Bulletin  of  the   University  of  Texas 

The  bond  acts  of  1879  did  not  contain  any  provisions  for  a 
sinking  fund.  This  method  of  paying-  the  public  debt  was 
changed  to  one  which  used  the  surplus  in  the  treasury  and  the 
proceeds  of  the  sale  of  the  public  lands.  In  1879  the  vacant  and 
unappropriated  lands  in  the  fifty-five  Panhandle  counties,  or  the 
territory  north  of  the  thirty-third  degree  of  latitude  and  west  of 
the  one  hundredth  degree  of  longitude,  were  set  aside  for  sale  at 
fifty  cents  an  acre,  and  one-half  of  the  proceeds  was  appropri- 
ated to  the  payment  of  the  public  debt.^  Only  $5,718  was  re- 
ceived up  to  the  end  of  the  fiscal  year  1880,  and  $2,308  was  ap- 
plied to  the  redemption  of  bonds. 

The  recognized  funded  debt  on  August  31,  1874,  was  $1,493,- 
800;  the  ascertained  floating  debt,  $1,136,527;  and  the  debt  of 
doubtful  validity,  exclusive  of  accumulated  interest,  due  the 
school  and  university  funds  was  $537,008 — or  a  total  debt  of  $3,- 
167,335.  On  August  31,  1880,  there  was  no  floating  debt,  and 
the  funded  debt,  including  that  of  doubtful  validity,  was  $5,- 
566,928.  The  increase  of  $2,399,593  was  due  principally  to  the 
pension  bond  act  of  1874  and  to  the  use  of  bond  sales  to  meet 
the  annual  deficiencies  in  the  current  revenues.  The  increase 
due  to  pensions  was  $1,117,300,  and  that  on  account  of  defi- 
ciencies was  approximately  $1,152,000.  The  receipts  to  the  gen- 
eral revenue  fund  from  bond  sales  amounted  to  $1,058,228,  dis- 
tributed as  follows  :- 

1875  $653,752 

1876  100,000 

1877  101,125 

1879  203,351 

Pensions  and  deficiencies  combined  were  responsible  for  an  ad- 
dition of  approximately  $2,269,300,  and  the  balance  of  the  in- 
crease was  due  to  the  funding  of  claims  antedating  January  16, 
1874. 


'Message  of  Governor  Roberts,  January  29,  1879.     Laws  of  1879,  p.  48. 

'^The  proceeds  in  1875  represented  bonds  sold  at  an  average  dis- 
count of  15  per  cent;  all  the  other  sales  were  at  par  or  at  a  premium. 
In  order  to  get  the  face  value  of  the  debt  which  the  proceeds  of  1875 
represent,  15  per  cent  is  added. 


A  Financial  Histoid   of  Texas  239 

The  close  of  this  period  witnessed  a  gratifying  advance  in  the 
credit  of  the  state,  for  whereas  10  per  cent  bonds  sold  in  1874 
and  1875  at  a  discount,  5  per  cent  bonds  brought  par  in  1880. 
In  1874  14  per  cent  of  the  funded  debt,  including  that  of  doubt- 
ful validity,  bore  6  per  cent  interest,  and  the  remainder  bore  10 
per  cent  and  7  per  cent.  In  1880  56  per  cent  was  on  a  6  per  cent 
and  5  per  cent  basis.  Five  per  cent  was  as  low  as  the  state 
could  get  money  in  the  open  market,  and  had  it  not  been  for  the 
fact  that  the  school  and  other  special  funds  took  so  large  a  share 
of  the  debt,  it  is  doubtful  if  a  5  per  cent  rate  could  have  been 
secured.  The  wiping  out  of  the  harassing  floating  indebtedness, 
the  refunding  operations,  and  the  establishment  of  the  treasury 
on  a  cash  basis  after  a  long  period  of  deficiencies  are  among  the 
most  notable  achievements  during  this  period.^ 


^According  to  the  report  of  the  Tenth  U.  S.  Census,  the  bonded  debt 
of  the  state  in  1880  was  $5,566,928;  the  debt  of  counties,  $2,509,287; 
the  debt  of  cities  and  towns,  $3,588,178. 


PART  VII. 
THE  PERIOD  1881-1915. 
Chapter  1. 
introduction. 

By  1880  Texas  had  emerged  definitely  from  under  the  spell 
of  depression  cast  by  the  Civil  War,  the  Reconstruction,  and 
the  panic  of  1873.  Conditions  which  trace  their  origin  to  these 
unhappy  periods  persist,  however,  and  tend  to  complicate  many 
of  the  political  and  economic  problems  which  engage  the  pres- 
ent generation. 

The  growth  of  population  during  this  period  took  Texas  from 
out  of  eleventh  place  and  put  her  in  1910  into  fifth  place  among 
the  states^     The  decennial  census  figures  were  as  follows: 

1880..... 1,591,749 

1890 •. 2,235,527 

1900 3,048,710 

1910 3,896,542 

The  negro  element  in  the  population  declined  relatively,  its 
percentage  of  the  total  being  24.7  in  1880,  21.8  in  1890,  20.4 
in  1900,  and  17.7  in  1910.  Negroes  numbered  393,384  in  1880, 
488,171  in  1890,  620,722  in  1900,  and  690.049  in  1910.  In  165 
counties  out  of  a  total  of  245,  the  percentage  of  negroes  of  the 
population  was  less  than  12.5.  These  were  mainly  the  Pan- 
handle and  the  western  and  southwestern  counties,  or  the 
newer,  more  sparsely  settled  and  non-cotton-growing  counties. 
In  only  eight  counties,  in  1910,  was  the  percentage  of  negroes 
over  50,  whereas  in  1900  this  was  true  in  the  case  of  thirteen 
counties.  In  those  counties  in  which  negroes  are  numerous 
they  are  an  asset  as  a  labor  force,  but  otherwise  they  are  a 
heavy  social  liability.  They  accumulate  little  property,  they 
are  an  unskilled  and  indifferent  class  of  laborers,  and  the 
expense  of  their  policing  and  education  falls  almost  wholly 
upon  the  whites. 


A  Financial  History  of  Texas  241 

The  population  of  Texas  is  very  largely  rural,  and  though 
the  urban  element  is  increasing,  the  change  is  not  at  a  rapid 
rate.  In  1890  the  rural  percentage  of  the  population  was  84.4, 
in  1900  it  was  82.9,  and  in  1910  it  was '75.9.  The  density  of 
population  was  6.1  persons  to  the  square  mile  in  1880  and  14.8 
persons  in  1910. 

Agriculture  in  1910  engaged  60  per  cent  of  the  population 
ten  years  of  age  and  over  employed  in  all  occupations,  as 
compared  with  68.8  per  cent  in  1880,  64.3  per  cent  in  1890, 
and  62.4  per  cent  in  1900.  Since  1880  the  expansion  of  agri- 
culture resulted  in  a  large  part  of  the  area  of  the  state  being 
reclaimed  from  a  state  of  uselessness  to  one  of  production. 
In  1880  21.6  per  cent  of  the  land  area  w^as  in  farms;  in  1890, 
30.6  per  cent ;  in  1900,  74.9  per  cent ;  and  in  1910,  67  per  cent. 
The  decline  between  1900  and  1910  was  due  to  the  fact  that 
land  which  was  used  for  grazing  in  1900  and  which  was  classi- 
fied under  farm  land  had  been  cut  into  small  tracts  by  1910, 
and  at  this  latter  date  these  tracts  were  owned  by  speculators 
or  others  who  withheld  them  from  use,  which  prevented  them 
from  being  classified  as  farm  land.  During  this  period  the 
Panhandle,  the  western  and  the  southwestern  parts  of  Texas 
were  brought  into  the  area  of  cultivation.  While  the  per  cent 
of  lands  in  farms  greatly  increased,  the  percentage  of  this  area 
which  was  improved  declined.  In  1880  34.9  per  cent  of  farm 
land  was  improved  and  the  percentage  in  1910  was  only  24.3. 
But  there  was,  of  course,  an  enormous  increase  in  the  absolute 
acreage  of  improved  land.  The  acreage  of  such  was  12,650,314 
in  1880  and  27,360,666  in  1910. 

Remarkable  increases  occurred  in  the  value  of  farm  property 
'during  the  period  1880-1910.     The  values  of  lands  and  build- 
ings were  $170,468,886  in  1880,  $399,971,289  in  1890,  $691,773,- 
613  in  1900,  and  $1,843,203,395  in  1910.    The  value  of  livestock 
was  $339,433,843  in  1910,  as  compared  with  $60,307,987  in  1880. 

The  statistics  for  manufacturing  are  not  comparable  farther 
back  than  1899.i     The  value  of  the  products  of  manufactures 


^Beginning  with  1899  the  United  States  Census  enumerated  only 
manufacturing  establishments  conducted  under  the  factory  system. 
Before  that  date  neighborhood,  hand  and  building  industries  were 
included. 


16— H 


242  Bulletin  of  the   University  of  Texas 

increased  from  $92,894,000  in  1899  to  $272,896,000  in  1909.  In 
1909  the  number  of  persons  ten  years  of  age  and  over  engaged 
in  manufacturing  and  mechanical  industries  was  184,396,  as 
compared  with  934,140  in  agriculture.  The  manufactures  which 
led  in  values  of  products  in  1909  were  those  whose  finished 
products  were  not  far  removed  from  the  raw  material  stage, 
such  as  slaughtering  and  meat  packing,  flour  and  grist  milling, 
the  manufacture  of  lumber  and  of  timber  products,  and  the 
manufacture  of  cottonseed  oil  and  .cake.  There  was  not  much 
pure  manufacturing  carried  on  in  1909,  by  which  is  meant 
manufactures  which  are  far  removed  from  the  raw  material 
stage.  The  gross  value  of  the  products  of  mining  enterprises — 
that  is,  mines,  quarries,  and  wells — was  $10,742,150  in  1909. 
Petroleum  and  natural  gas  accounted  for  $6,356,000,  or  59.4 
per  cent  of  the  total.  The  oil  industry  has  developed  mainly 
since  1900.  The  value  of  the  bituminous  coal  mined  in  1909 
was  $3,136,004. 

Though  manufacturing  and  mining  increased  considerably 
between  1880  and  1910,  Texas  was  in  1910  predominantly 
agricultural.  In  value  of  products,  capital  invested,  and  popu- 
lation engaged,  agriculture  far  outdistanced  other  occupations. 

The  growth  of  banking  in  Texas  is  one  of  the  best  evidences 
of  the  material  development  of  the  state.  In  1880  there  were 
in  the  state  only  13  national  banks,  with  a  total  capital  of 
$1,579,000.  and  deposits  of  $2,081,000.  In  1890  the  number  of 
banks  was  189,  the  capital  and  surplus  amounted  to  $25,760,000, 
and  deposits  were  $30,450,000.  In  1900  the  number  of  banks 
had  increased  to  only  223,  with  capital  and  surplus  of  $25,337,- 
000  and  deposits  of  $49,749,000.  The  greatest  increase  took 
place  after  1900,  and  was  due  to  the  modifications  in  the 
national  bank  act  in  1900.  to  the  incorporation  of  state  banks, 
and  to  prosperous  times.  In  1915  there  were  535  national 
banks,  with  a  combined  capital  and  surplus  of  $81,208,000,  and 
with  demand  and  time  deposits  of  $185,100,000.^ 

The  incorporation  of  state  banks  began  in  1905.  An  amend- 
ment to  the  state  constitution  removed  the  ban  which  had 
existed  since  1876.     The  number  grew  rapidly  on  account  of 


^Report  of  the  Comptroller  of  the  Currency,  1915,  vol.  2,  p.  351. 


A  Financial  History  of  Texas  243 

the  low  minimum  capital  requirements  ($10,000)  and  the  law 
guaranteeing  demand  deposits.  In  September,  1905,  there  were 
29  state  banks,  with  a  capital  and  surplus  of  $1,936,000,  and 
demand  and  time  deposits  of  $1,701,832.  By  1915  there  were 
835  state  banks  and  trust  companies,  their  combined  capital 
stock  and  surplus  was  $39,575,738,  and  they  had  demand  and 
time  deposits  of  $77,253,027.^  The  development  of  banking  has 
made  easier  the  taxation  of  loanable  funds,  inasmuch  as  such 
funds  are  more  readily  reached  when  in  the  control  of  corpo- 
rations than  when  they  are  in  the  hands  of  private  lenders. 

Railroad  mileage  amounted  to  3,244  in  1880,  8,710  in  1890, 
9,867  in  1900,  and  15,635  in  1915.  Though  the  absolute  mileage 
was  very  large  in  1915,  there  were  only  5.9  miles  of  line  to 
each  100  square  miles  of  area  of  the  state.  In  1880  there  were 
1.2  miles  of  line  to  each  100  square  miles  of  area.  In  1882  the 
policy  of  land  grants  by  the  state  in  aid  of  railroad  construc- 
tion came  to  an  end.  The  important  construction  since  1880 
was  that  which  opened  up  the  Panhandle  and  the  southwest 
and  made  possible  the  expansion  of  agriculture  into  those 
sections. 


^MSS.  Statement,    September   2,   1915,   department  of  insurance   and 
banking. 


Chapter  2. 

expenditures. 

An  index  of  the  development  of  a  state  is  the  growth  and 
character  of  its  public  expenditures.  The  eminent  German 
economist,  Adolph  Wagner,  has  stated  what  he  calls  the  law 
of  the  increase  of  public  expenditures:  "Increase  is  both 
extensive  and  intensive;  the  central  and  local  governments 
constantly  undertake  new  functions,  while  they  perform  both 
new  and  old  functions  more  efficiently  and  completely."  The 
public  expenditures  of  Texas  since  1880  exhibit  the  tendencies 
asserted  by  Professor  Wagner.  While  total  net  expenditures 
increased  from  $2,349,973  in  1881  to  $16,659,844  in  1915,  or 
by  609  per  cent,  those  on  account  of  education,  charities  and 
corrections,  and  pensions  and  support  of  soldiers'  homes  in- 
creased from  $977,998  in  1881  to  $13,866,269  in  1915,  or  1317 
per  cent.^ 

Expenditures  of  the  kind  which  Herbert  Spencer  calls  pro- 
tective— in  other  words,  those  for  the  judiciary,  for  the  bare 
general  and  financial  administrative  functions  of  the  govern- 
ment, and  for  the  militia — showed  a  percentage  decrease,  as 
did  also  those  for  the  legislature,  public  printing,  and  interest 
on  the  public  debt.  Except  in  the  case  of  the  interest  item, 
there  was  an  absolute  increase  in  all  expenditures,  and  it  was 
especially  large  in  the  items  of  general  administration  and 
judiciary. 

General  administrative  agencies  in  1880  were  the  executive, 
state,  and  attorney  general's  departments;  the  department  of 
insurance,  statistics  and  history,  the  state  health  officer,  and 
the  general  land  office.  There  has  been  a  marked  development 
since  1880  in  the  establishment  of  those  general  administrative 
agencies  whose  object  it  is  to  conserve  directly  the  economic, 


^The  only  expenditures  for  the  penitentiary  which  are  included  are 
those  made  out  of  the  general  treasury  of  the  state.  The  amounts 
for  education,  charities  and  corrections,  etc.,  are  not  net  expenditures, 
but  are  a  combination  of  expenditures  and  warrants  drawn  on  the 
general  treasury. 


A  Financial  History  of  Texas  245 

physical  and  social  welfare  of  the  citizens.  These  have  taken 
the  form  of  boards,  commissions,  and  commissioners. 

In  1881  a  fish  commissioner  was  authorized,  and  Kis  duties 
were  concerned  with  the  propagation  and  preservation  of  fish.^ 
After  1885,  and  until  1895,  this  work  was  suspended,  but  in 
1895  the  office  of  fish  and  oyster  commissioner  was  created,  and 
regulation  of  the  fishing  and  the  oystering  in  the  bays  and 
coast  waters  of  the  state  was  begun.-  In  1907  the  duties  of 
this  officer  were  extended  to  game  protection,  and  his  title 
was  changed  to  that  of  game,  fish,  and  oyster  commissioner.^ 
This  state  service  is  self-sustaining  as  a  result  of  taxes,  fees, 
and  rents  of  oyster  beds.  In  1883  the  office  of  state  engineer 
was  created,  and  it  lasted  until  1886.  It  was  the  duty  of  this 
official  to  inspect  the  railroads  of  the  state  to  see  that  they 
complied  with  the  laws.*  This  and  other  laws  enacted  at  this 
time  constituted  the  beginning  of  railroad  regulation  proper 
in  Texas,  the  culmination  of  which  was  the  establishment  in 
1891  of  a  mandatory  commission  with  supervision  over  rates, 
service,  and  the  issue  of  securities. "^ 

In  1887  the  bureau  of  agriculture  was  created  and  attached 
to  the  department  of  insurance,  statistics,  and  history,  and  its 
function  was  defined  as  "to  aid  and  advance  the  interest  of 
agriculture  in  Texas."*'  In  1907  this  bureau  was  made  into  a 
separate  department."^  In  1893  a  livestock  sanitary  commission 
was  established  to  deal  with  quarantine  and  other  sanitary 
regulations  affecting  livestock,  and  in  1911  the  office  of  state 
sheep  inspector  was  created.*  The  growing  recognition  by  the 
state   of  its  duty  to   promote   the  agricultural   and  livestock 

^Laws  of  1881,  p.  83. 

■^Laws  of  1895,  Reg.  Sess.,  p.  170.  Laws  of  1899,  p.  312.  Laws 
of  1905,  Reg.  Sess.,  p.  128.  Laws  of  1907,  Called  Sess.,  pp.  233, 
254.      Laws  of  1909,  p.  325. 

^Laws  of  1907,  p.  254.  Rev.  Civil  Stats.,  1911,  title  63,  chap.  2. 
Laws  of  1911,  p.  62.      Laws  of  1913,  Reg.  Sess.,  p.  297. 

*Laws  of  1883,  p.  98. 

"Laws  of  1891,  p.  55.      Rev.  Civil  Stats.,  1911,  title  115,  chap.  15. 

"Laws  of  1887,  p.  98. 

^Laws  of  1907,  p.   127.      Rev.  Civil  Stats.,   1911,  arts.   4435-4475. 

"Laws  of  1893,  p.  70.  Rev.  Civil  Stats.,  1911,  title  124,  chap.  8. 
Laws   of    1911,    p.    9.      Rev.   Civil   Stats.,    1911,    title   136,   Chap     1. 


246  Bulletin  of  the   University  of  Texas 

interests  of  the  state  was  attested  by  the  provision  made  in 
1909  for  the  establishment  of  stations  where  experiments  should 
be  conducted  in  agriculture,  horticulture,  and  animal  hus- 
bandry, and  by  the  provision  made  for  teaching  elementary 
agriculture  in  the  common  schools,  the  state  normals,  and  in 
the  summer  schools  of  the  Agricultural  and  Mechanical  College, 
the  University,  and  the  College  of  Industrial  Arts.^  In  1911 
provision  was  made  for  the  establishment  of  rural  high  schools. 
In  1914,  following  the  outbreak  of  the  European  war  and  the 
consequent  difficulties  experienced  by  the  farmers  in  the  mar- 
keting of  their  products  and  in  the  securing  of  credit,  provision 
was  made  for  the  establishment  of  state  warehouses  and  for 
state  assistance  in  the  marketing  of  farm  products.^  This  state 
service  is  under  the  supervision  of  the  commissioner  of  insur- 
ance and  banking.  Bearing  also  on  the  agricultural  interests 
were  the  creation  in  1909  of  the  state  levee  and  drainage  board, 
whose  work  looks  to  the  reclamation  for  agricultural  uses  of 
the  overflowed,  marsh  and  swamp  lands  in  the  state ;  the 
establishment  in  1913  of  a  board  of  water  engineers,  which  has 
the  administration  of  a  general  irrigation  law,  including  the 
control  over  the  waters  of  the  state  which  may  be  used  for 
irrigation  purposes;  and  the  creation  in  1915  of  the  position 
of  state  forester.^  In  1915  there  was  appropriated  $100,000 
for  the  payment  of  bounties  for  the  destruction  of  wild  animals 
which  are  inimical  especially  to  livestock.^ 

In  1903  the  bureau  of  vital  statistics  was  established  and  the 
title  of  the  quarantine  department  was  changed  to  that  of  the 
state  board  of  health  and  vital  statistics.^  Appropriations  have 
increased  as  the  scope  of  the  board's  functions  have  grown 
and  as  the  public  has  realized  the  important  character  of  the 
work.    In  the  quarantine  work,  however,  there  has  been  some 


^Laws  of  1909,  pp.  332,  221.  Laws  of  1913,  Reg.  Sess.,  p.  339.  Lawff 
of  1913,  Called  Sess.,  p.  98. 

-Laws  of  1914,  Second  Called  Sess.,  p.   2. 

^Laws  of  1909,  p.  136.  Laws  of  1911,  p.  160.  Laws  of  1913,  Reg. 
Sess.,  pp.  292,  358.     Laws  of  1915,  Reg.  Sess.,  p.  88. 

*Laws  of  1915,   Reg.  Sess.,  p.   220. 

"Laws  of  1903,  p.  220;  Rev.  Civil  Stats.,  1911,  title  66,  chaps.  1,  2. 
Laws  of  1911,  p.  173.     Laws  of  1913,  Called  Sess.,  p.  191. 


A  Financial  History  of  Texas  247 

needless  duplication  by  the  state  of  the  work  of  the  Federal 
government.  In  1907  the  office  of  dairy  and  food  commissioner 
was  created,  thus  aligning  the  state  on  the  side  of  the  pure 
food  movement/  In  1911  an  anti-tuberculosis  commission  was 
created  and  two  tuberculosis  colonies,  now  called  a  sanatorium^ 
were  established.'-  In  1913  the  state  health  department  was 
empowered  to  engage  in  statewide  publicity  work  regarding- 
the  cause  and  prevention  of  communicable  diseases,  but  while 
the  law  was  approved,  the  appropriation  to  make  it  effective 
was  vetoed  by  the  governor.^ 

.  In  1907  a  state  mining  board  was  established  and  provision 
was  made  for  the  inspection  of  mines  by  a  state  inspector  for 
the  purpose  of  securing  the  safety  of  those  engaged  in  the 
mining  occupation.*  In  1909  the  bureau  of  labor  statistics  was 
created,  and  the  commissioner  of  the  same  was  empowered  to 
ascertain  violations  of  those  laws  which  are  intended  to  safe- 
guard the  health  and  safety  of  employees,  and  to  collect  sta- 
tistics ''relating  to  all  departments  of  labor  in  Texal,  and 
especially  as  affecting  or  bearing  upon  the  commercial,  social, 
educational,  and  sanitary  conditions  of  the  employees  and  their- 
families,  the  means  of  escape  from  dangers  incident  to  their 
employment,  the  protection  of  life  and  health  in  factories  and[ 
other  places  of  employment,  the  labor  of  children  and  of  women 
and  the  number  of  hours  of  labor  exacted  of  them."^  In  1903 
a  small  appropriation  introduced  the  study  of  manual  training" 
into  the  state  normals,  and  in  1909  and  1911  aid  was  extended 
to  aid  the  introduction  of  the  study  into  the  common  schools.*^ 
In  1913  an  employers'  liability  law  was  passed.  This  law  pro- 
vided for  an  industrial  accident  board,  whose  salaries  are  paid 
by  the  state  and  whose  duty  it  is  to  carry  out  the  terms  of  the 
law. 


^Laws  of  1907,  p.  62.     Laws  of  1911,  p.  76. 

-Laws  of  1911,  p.  136.     Laws  of  1913,  Reg.  Sess.,  p.  120. 

^Laws  of  1913,  First  Called  Sess.,  p.  191. 

*Laws  of  1907,  p.  331.     Rev.  Civil  Stats.,  1911,  title  93,  chap.  2. 

'Laws  of  1909,  Reg.  Sess.,  p.  59.  Laws  of  1911,  p.  17.  Laws  of 
1913,  Reg.   Sess.,  p.   237. 

"Laws  of  1903,  p.  66.  Laws  of  1909,  Reg.  Sess.,  p.  221.  Laws  of 
1911,  p.  34. 


248  Bulletin  of  the   TJniversity  of  Texas 

Upon  the  passage  of  the  law  authorizing  the  incorporation 
of  state  banks  and  upon  the  establishment  of  the  department 
of  agriculture,  the  old  department  of  agriculture,  insurance, 
and  banking  was  reorganized;  resulting  in  the  department  of 
agriculture  and  the  department  of  insurance  and  banking.  In 
1909  the  control  of  the  state  library  was  taken  from  the  depart- 
ment of  insurance  and  banking  and  given  to  a  state  library 
and  historical  commission/ 

The  state  fire  rating  board  of  1909  was  succeeded  by  the  state 
insurance  board  of  1910  which  in  turn  was  succeeded  in  1913 
by  the  stat^  fire  insurance  commission.-  The  commission  has 
among  its  other  duties  that  of  fixing  the  rates  of  premiums 
charged  by  the  fire  insurance  companies. 

In  the  field  of  financial  administration  the  only  new  agencies 
established  since  1880  are  the  state  revenue  agent  whose  place 
was  created  in  1891,  the  state  purchasing  agent  for  the  eleemosy- 
nary .institutions  whose  appointment  and  duties  were  defined  in 
1900,  and  the  state  tax  board  which  dates  from  1905.^ 

The  above  described  boards,  bureaus,  commissions,  depart- 
ments, etc.,  represent  mainly  new  activities  of  the  state,  and  they 
are,  with  a  few  exceptions,  merely  beginnings  in  their  respective 
lines.  They  have  not  caused  any  very  great  addition  to  the  ex- 
penditures of  the  state,  and  they  are  more  significant  in  poten- 
tialities than  they  are  in  accomplishments.  The  poor  showing  in 
the  way  of  results  of  some  of  them  is  due  partly  to  lack  of  ade- 
quate financial  support  by  the  legislature  and  partly  to  the  in- 
competence of  those  charged  with  the  performance  of  the  services. 

Social  expenditures  are  those  for  education,  including  the  dis- 
l)ursements  of  the  available  school  fund,  those  for  the  asylums, 
the  orphans'  home,  the  reformatories  and  penitentiaries,  and 
those  for  pensions  and  for  the  Confederate  veterans'  and  Con- 
federate woman's  homes.     This  group  of  expenditures  is  espe- 


^Laws  of  1907,  p.  127.  Laws  of  1909,  Reg.  Sess.,  p.  122.  Rev.  Civil 
■Stats.,  1911,  title  85,  chap.  1. 

=Laws  of  1909,  First  Called  Sess.,  p.  311.  Laws  of  1910,  p.  125.  Laws 
of  1913,  Reg.   Sess.,  p.   195. 

=^Laws  of  1891,  p.  87.  Laws  of  1899,  p.  138.  Laws  of  1905,  p.  351. 
Rev.  Civil  Stats.,  1911,  arts.  7366,  7392,  7325-7338,  7407-7426.  Laws  of 
1915,  Reg.  Sess.,  p.  193. 


A  Financial  History  of  Texas  249 

eially  significant,  because  it  measures  the  solicitude  of  the  state 
for  its  future  citizens,  its  old  soldiers,  and  its  unfortunate  wards. 
Expenditures  for  education  increased  from  $828,192  in  1881  to 
$9,446,222  in  1915,  and  whereas  in  1881  they  constituted  29.5 
per  cent  of  the  state's  total  expenditures,  in  1910  they  were  66.9 
per  cent  and  in  1915  56  per  cent.  Expenditures  for  the  asylums 
and  the  correctional  institutions  increased  from  $147,969  in  1881 
to  $2,861,876  in  1915,  or  from  6  per  cent  of  the  state's  total  ex- 
penditures to  17  per  cent.  Expenditures  for  pensions  and  for 
the  homes  of  the  veterans  and  their  wives  increased  from  $1,837 
in  1881  to  $1,558,171  in  1915.  This  was  an  increase  of  from 
seven-tenths  of  one  per  cent  of  the  state's  total  expenditures  to 
9.2  per  cent.  This  group  of  social  expenditures  made  up  over 
82  per  cent  of  the  state's  total  expenditures  in  1915  as  compared 
with  about  36  per  cent  in  1881. 

The  act  establishing  the  main  branch  of  the  University  was 
passed  in  1881,  and  provision  for  the  establishment  of  the  medi- 
cal branch  at  Galveston  was  made  in  1890.^  The- school  of  mines 
at  El  Paso  was  authorized  in  1913.-  In  1899  the  North  and  the 
Southwest  Texas  normals  were  established,  in  1901  the  College 
of  Industrial  Arts  and  in  1909  the  West  Texas  Normal.^  In 
1915  three  new  state  normals  were  authorized,  $500,000  per  year 
for  the  two  years  1916  and  1917  was  appropriated  out  of  the 
general  treasury  to  aid  the  country  schools,  and  the  appropria- 
tions for  the  higher  educational  institutions  were  generously  in- 
creased.* In  1884  the  office  of  superintedent  of  public  instruc- 
tion was  created,  but  it  was  not  until  1893  there  was  established 
a  department  of  education  with  the  superintendent  at  its  head 
and  supported  out  of  the  general  revenue  fund  instead  of  out 
of  the  available  school  fund.^  Notable  provision  was  made  in 
1915  for  the  blind  and  for  the  feeble  minded  wards  of  the  state. 
An  appropriation  of  $300,000  was  made  for  a  site  and  fire-proof 


^Laws  of  1881,  p.  79.     Laws  of  1889,  p.  74. 

*Laws  of  1913,  Reg.  Sess.,  p.  427. 

*Laws  of  1899,  pp.  74,  175.  Laws  of  1901,  Reg.  Sess.,  p.  306.  Laws 
of  1909,  Reg.  Sess.,  p.  235. 

*Laws  of  1915,  Reg.  Sess.,  p.  116.  Laws  of  1915,  First  Called  Sess., 
pp.    22,   113-114. 

•Laws  of  1893,  p.  182. 


250  Bulletin  of  the  University  of  Texas 

buildings  for  the  care  of  the  blind,  and  an  appropriation  of 
$100,000  was  made  for  the  establishment  of  a  farm  colony  for 
the  feeble  minded/ 

In  1895  the  Confederate  veterans'  home  which  had  been  con- 
ducted by  the  John  B.  Hood  camp  of  Confederate  veterans  and 
maintained  by  private  aid  was  taken  over  by  the  state,  and  in 
1911  the  Confederate  woman's  home  which  had  been  previously 
privately  maintained  was  taken  over.-  These  homes  care  for  the 
indigent  Confederate  veterans  and  their  widows.  After  the  re- 
peal in  1879  of  the  cash  pension  act  of  1876,  cash  pensions  to 
veterans  of  the  Texas  Revolution  continued  to  be  paid  under 
old  special  acts,  but  the  payments  aggregated  only  a  very  small 
amount.  The  land  pension  act  of  1879  granted  640  acres  to  in- 
digent veterans  or  their  widows,  but  in  1881  a  new  land  pension 
act  was  passed  which  granted  1,280  acres  and  abolished  the  con- 
dition that  the  recipient  should  be  indigent.^  In  1883  and  annual 
cash  pension  of  $150  was  granted  to  indigent  veterans  of  the 
Texas  Revolution,  signers  of  the  Texas  Declaration  of  Inde- 
pendence, or  their  widows.*  In  1899  cash  pensions  to  indigent 
and  disabled  Confederate  veterans  or  their  widows  were  granted.^ 
The  law  contemplated  a  pension  of  $8  per  month  payable  quart- 
erly, though  it  was  provided  that  if  the  sum  appropriated  should 


^Laws  of  1915,  First  Called  Sess.,  p.  36.  Laws  of  1915,  Reg.  Sess., 
p.  143. 

-Laws  of  1895,  Reg.  Sess.,  p.  42.  Laws  of  1911,  Reg.  Sess.,  p.  50. 
The  transfer  of  the  Confederate  Home  was  first  provided  for  in  1891, 
but  the  constitutionality  of  the  act  was  regarded  as  doubtful,  and  an 
amendment  to  the  constitution  was  consequently  adopted  in  1894 
which  authorized  the  transfer.  This  amendment  fixed  the  maximum 
appropriation  for  the  home  at  $100,000  year.  Another  amendment 
adopted  in  1910,  making  constitutional  the  establishment  of  a  home 
for  the  wives  and  widows  of  Confederate  veterans,  limited  the  total 
appropriation  for  the  two  homes  to  $150,000  a  year.  Constitution,  art. 
3,  sec.  51. 

'Laws  of  1881,  p.  35. 

^Laws  of  1883,  p.  36. 

'Laws  of  1899,  p.  182.  Laws  of  1903,  Reg.  Sess.,  p.  108.  The  con- 
stitutional amendment  authorizing  pensions  which  was  adopted  in  1898 
made  the  maximum  appropriable  for  pensions  $250,000  a  year.  The 
amendment  adopted  in  1904  raised  the  maximum  to  $500,000.  Consti- 
tution, art.  3,  sec.  51. 


A  Financial  History  of  Texas  251 

be  insufficient  to  pay  a  pension  of  this  amount  the  appropria- 
tion should  be  pro-rated  among  the  pensioners.  The  practice 
prevailed  of  pro-rating:  the  amount,  and  the  appropriation  in- 
creased from  $100,000  in  1889  to  $500,000  in  1911. 

An  amendment  to  section  51  of  article  3  of  the  constitution 
was  adopted  in  November,  1912,  which  authorized  the  levying 
of  an  ad  valorem  tax  not  to  exceed  five  cents  on  the  one  hundred 
dollars  valuation  of  property  for  the  purpose  of  creating  a  spe- 
cial fund  for  the  payment  of  pensions  to  those  who  served  in 
the  Confederate  army  and  navy  or  in  frontier  organizations  or 
state  militia  during  the  Civil  War  or  to  their  widows.  This 
amendment  was  carried  into  effect  by  the  law  of  April  7,  1913, 
and  a  tax  of  five  cents  was  levied.^  The  amount  received  by  the 
pension  fund  in  1915  was  $1,277,669.46,  and  the  amount  dis- 
bursed was  $1,442,413.85.- 

By  the  acts  of  February  20  and  April  18,  i879,  3,050,000 
acres  of  public  lands  w^ere  set  aside  to  secure  a  state  capitol.  A 
contract  was  entered  into  on  January  18,  1882,  whereby  in  re- 
turn for  3,000,000  acres  of  land  situated  in  the  counties  of  Dal- 
lam, Hartley,  Oldham,  Deaf  Smith,  Palmer,  Castro,  Bailey, 
Lamb  and  Hockley,  valued  generally  at  the  time  at  fifty  cents 
an  acre,  Matthias  Schnell,  of  Rock  Island,  Illinois,  agreed  to  con- 
struct a  capitol.^  The  present  magnificent  granite  structure  was 
brought  to  completion  in  1888,  and  the  chief  money  expense  to 
the  state  in  connection  with  it  was  its  furnishings  and  the  repair 


^Laws  of  1913,  Reg.  Sess.,  pp.  282,  95.     Laws  of  1911,  p.  288. 

"Report  of  the  Comptroller,  1914,  p.  15.  The  year  1914  was  the 
first  one  under  the  new  pension  law.  To  each  pensioner  on  the  total 
disability  list  the  annual  pension  was  $100;  to  each  pensioner  not 
on  the  total  disability  list  the  annual  pension  was  $67.50.  The  pen- 
sions were  paid  quarterly.  Since  the  new  law  the  number  of  pen- 
sioners has  nearly  doubled.  When  the  new  law  was  passed  it  was 
expected  that  each  pensioner  would  receive  a  pension  of  $100  yearly; 
Austin  American,  August  23,  1915.  In  January,  1915,  there  were  18,000 
pensioners  as  compared  with  11,000  in  1911.  Of  the  18,000,  there  wer« 
1,280  who  were  totally  disabled  and  who  received  $8  per  month;  the 
remainder  received  $7.33  per  month;  House  Journal,  34th  Leg.  Reg. 
Sess.,  p.  53. 

^Contract  for  building  the  New  State  Capitol;  Reports  of  Depart- 
ments, 1881-1882. 


252  Bulletin  of  the   University  of  Texas 

of  the  grounds,  for  which  $171,500  was  appropriated  in  1888 
and  1889.  In  1882  the  old  eapitol  was  destroyed  by  fire,  and 
the  state  was  put  to  the  expense  of  a  special  session  of  the  legis- 
lature and  of  the  construction  of  a  temporary  eapitol,  for  which 
latter  purpose  $50,000  was  appropriated.  Monuments  have  been 
erected  on  the  eapitol  grounds  and  elsewhere  to  commemorate 
the  memory  of  those  whose  names  are  illustrious  in  Texas  history ; 
the  battlefield  of  San  Jacinto  has  been  purchased  and  made  into 
a  state  park ;  and  the  Alamo  has  been  purchased  to  be  converted 
into  a  memorial  worthy  of  its  heroic  associations.  In  connection 
with  public  buildings  and  grounds  may  be  mentioned  the  crea- 
tion in  1911  of  the  office  of  state  inspector  of  masonry,  public 
buildings  and  works.^ 

The  expenditures  on  account  of  the  state  militia  and  state 
rangers  decreased  from  $92,076  in  1881  to  $57,815  in  1910  and 
then  increased ^:o  $123,143  in  1915.  A  movable  state  police  force, 
known  as  the  Texas  rangers,  dates  from  1876.  Following  the 
break-up  of  the  Confederacy  and  lasting  until  the  eighties  there 
was  an  outbreak  of  lawlessness  in  the  state,  and  life  and  property, 
especially  in  the  west  and  southwest  parts  of  the  state,  were  im- 
periled and  subject  to  depredation.  The  state  police  of  the  Davis 
administration  was  organized  partly  to  meet  this  condition  of 
affairs,  but  not  only  was  it  not  a  movable  force,  but  it  was  com- 
posed in  no  small  measure  of  ruffians,  was  a  political  machine, 
and  caused  strife  and  disorder  instead  of  suppressing  it.-  By 
1879  protection  from  Indians  and  marauding  Mexicans  was  en- 
trusted to  the  United  States  Government  and  to  Mexico,  but 
thieves  and  desperadoes  contined  to  infest  the  frontier,  and  the 
inefficiency  of  the  county  sheriff  system  to  protect  life  and  prop- 
erty was  apparent.^  A  state  ranger  force  of  twenty-seven  men 
was  again  organized  in  1879,  and  an  annual  appropriation  of 
$100,000  was  made  for  each  of  the  years  1880  and  1881  for  the 
purpose  of  suppressing  lawlessness  and  crime.     After  1880  ex- 


^Laws  of  1911,  p.  207.     Laws  of  1915,  p.  253. 

-Galveston  News,  October  13,  1882.  The  force  organized  in  1876 
was  composed  of  53  men,  and  $150,000  was  appropriated  for  it  in  1877 
and  1878. 

^Galveston  News,  January  30,  1879. 


A  Financial  History  of  Texas  253 

penditures  for  tin's  purpose  decreased;  though  in  1884,  on  ac- 
count of  the  outbreak  of  fence  cutting  and  disorder  in  the  west- 
ern counties,  a  special  appropriation  of  $50,000  was  made,  but 
only  $16,500  was  expended.  The  disturbed  conditions  on  the 
Mexican  border  since  1910  have  brought  the  rangers  again  into 
prominence,  and  appropriations  for  the  force  have  been  in- 
creased. The  force  may  consist  of  not  more  than  four  com- 
panies of  mounted  men,  each  company  to  consist  of  not  more  than 
one  captain,  one  first  sergeant  and  twenty  privates.  The  actual 
number  is  much  less,  however.  In  January,  1915,  the  force  con- 
sisted of  three  captains  and  thirteen  enlisted  men.^ 

Since  1880  expenditures  for  the  volunteer  guard  have  in- 
creased, and  after  1890  the  cause  of  the  increase  has  been  the 
cost  of  transportation  and  subsistence  of  the  guard  on  the  occa- 
sions of  annual  encampments  and  camps  of  instruction. 

The  cost  of  the  judiciary  increased  from  $310,690  in  1881  to 
$1,057,197  in  1915,  but  its  proportion  of  total  expenditures  de- 
creased from  12.6  per  cent  to  6.2  per  cent.  In  1880  the  judiciary 
was  composed  of  one  supreme  court,  one  court  of  appeals  and 
thirty-three  district  courts.  By  1901  there  were  a  supreme  court, 
one  court  of  criminal  appeals,  five  courts  of  civil  appeals,  each 
with  three  judges,  and  fifty-eight  district  judges.  By  1915  the 
courts  of  civil  appeals  had  increased  to  nine,  and  district  judges 
numbered  eighty-five.  The  responsibility  for  the  absolute  in- 
crease in  judicial  expenditures  is  to  be  divided  between  new 
courts,  on  the  one  hand,  and  fees  and  similar  payments  to  sher- 
iffs, clerks,  county  judges,  constables,  and  attached  witnesses 
on  the  other.  Fees  and  similar  payments  constituted  57.6  per 
cent  of  judicial  expenditures  in  1881,  62.9  per  cent  in  1891,  63.6 
per  cent  in  1895,  but  after  1897,  and  on  account  of  the  new  fee 
act  of  that  year,  their  share  fell  off,  being  60.6  per  cent  in  1900, 
56.9  per  cent  in  1910,  and  54.7  per  cent  in  1915.  The  fees  of 
sheriffs,  clerks  and  attorneys  in  felony  cases  showed  a  marked 
decrease  as  a  result  of  changes  in  the  fee  laws. 


^House  Journal,  34th  Leg.,  Reg.  Sess.,  p.  48.     For  governing  law,  see 
Rev.  Civil  Stats.,  1911,  title  116,  chap.  1. 


254 


Bulletin  of  ilie   TJniversity  of  Texas 


Payments  to  attaelied 
witnesses  and  fees  of 
county  judges  and  others 
in  examinino-  trials.  Total 


;   172 

$178,968 

148,600 

560,084 

113,114 

404,868 

188,516 

723,986 

135,778 

542,150 

180,849 

445,087 

222,261 

585,490 

199,398 

515,729 

187,429 

551,408 

197,517 

578,812 

Fees  to  sheriffs,  clerks 
and  attorneys  in  felony 
cases. 

1881    $178,796 

1887   411,484 

1891    291,754 

1894   535,470 

1895    406,372 

1900   264,138 

1905    363,229 

1910   316,331 

1914   363,979 

1915   381,294 


Legislation  bearing  on  the  payment  of  the  expenses  of  attached 
witnesses  and  fees  to  county  judges  and  others  was  enacted  in 
1883  and  was  the  most  important  legislation  on  the  subject  after 
1876.^  Governor  Ross  called  attention  in  1889  to  the  immense 
drain  upon  the  treasury  made  by  fees  in  felony  cases,  but  only 
slight  and  unimportant  amendments  were  made.-  The  high 
water  mark  of  fee  and  similar  payments  was  reached  in  1894  in 
the  unprecedented  sum  of  $723,986.  The  question  was  a  very 
live  one  in  1895;  governors  Hogg  and  Culberson  directed  at- 
tention to  it,  and  a  determined  effort  was  made  to  effect  a  re- 
form, particularly  in  the  direction  of  limiting  the  maximum  sum 
which  county  and  district  officers  could  receive.^  A  fee  bill, 
known  as  the  Mills  Bill,  was  bitterly  lobbied  against,  met  parlia- 
mentary obstructions,  and  finally  died,  and  an  innocuous  bill 
on  the  subject  was  passed.*  The  state  Democratic  platform  of 
1896  demanded  a  reform  of  the  system  and  Governor  Culberson 
again  attacked  with  great  ability  the  abuses,  with  the  result  that 


^Laws  of  1883,  pp.  5,  22,  and  117.  Earlier  legislation  is  found  in 
Laws  of  1876,  p.  284,  Laws  of  1879,  Reg.  Sess.,  p.  90,  Laws  of  1881, 
p.    37. 

^Message  of  Governor  Ross,  January  10,  1889.  Laws  of  1889,  p. 
38.      Laws  of  1891,   p.    138. 

^Message  of  Governor  Hogg,  January  11,  1895.  Message  of  Governor 
Culberson,  January  16,  1895. 

^Houston  Post,  January  22,  and  April  22,  23,  and  24,  1895.  Laws  of 
1895,  Reg.  Sess.,  pp.  146,  148,  and  182. 


A  Financial  History  of  Texas  255 

the  important  law  of  1897  was  passed  which  reduced  fees  and 
limited  the  total  compensation  of  county  and  district  officers.^ 
The  sheriffs,  however,  who  were  among  the  largest  beneficiaries 
of  the  old  system,  were  powerful  enough  politically  to  escape 
the  maximum  compensation  provisions  of  the  act,  and  though 
the  act  reduced  their  fees,  these  officers  were  influential  enough 
to  secure  in  1901  a  restoration  of  the  fees  to  the  former  profitable 
amounts.^  In  1913  there  was  revision  of  the  fee  law,  and  a  maxi- 
mum compensation  was  set  for  the  sheriffs.^ 

The  amount  payable  out  of  the  general  treasury  on  account  of 
fees  and  similar  payments  fluctuates  from  year  to  year  according 
to  the  activity  of  prosecuting  and  other  officers,  and  this  has 
given  rise  to  more  deficiency  appropriations  than  any  other  ob- 
ject of  state  expense,  and  has  frequently  worked  a  hardship  upon 
officers  and  witnesses.* 

Beginning  about  1911  dissatisfaction  with  the  fee  method  of 
compensating  public  officers  has  been  on  the  increase,  and  the 
press  and  governors'  messages  have  expressed  severe  condemna- 
tion of  the  method.  It  has  been  an  incentive  to  the  most  despi- 
cable injustice  through  false  arrests  and  prosecutions  of  those 
who  are  unable  to  protect  themselves,  and  the  state  has  been 
robbed  through  padded  witness  and  tax  lists,  through  excessive 
mileage  charges  by  sheriffs  for  summoning  witnesses  and  trans- 
porting prisoners,  and  through  extravagant  compensation  for 
unskilled  work.^     The  cases  of  a  justice  of  the  peace  who  re- 


^Messages  of  Governor  Culberson,  May  25  and  June  18,  1897,  and 
January  10,  1899.  Houston  Post,  April  29,  May  2,  and  May  28,  1897. 
Laws  of  1897,  Called  Sess.,  p.  5. 

=Laws  of  1901,  Reg.  Sess.,  p.  285.  Other  legislation  on  fees  is  found 
in  Laws  of  1901,  First  Called  Sess.,  p.  21,  Laws  of  1903,  Reg.  Sess., 
pp.  219,  230,  and  Laws  of  1907,  p.  466. 

^Laws  of  1913,  Reg.  Sess.,  pp.  246,  286.  See  also  Laws  of  1911,  pp. 
104.  107,  and  109,  and  Laws  of  1913,   Called  Sess.,  p.  20. 

"Reports  of  the   comptroller,   1898,    1899. 

■^See  account  of  the  so-called  peonage  cases  which  were  tried  in  the 
Federal  District  Court  in  Austin  in  January  and  February,  1911.  See 
articles  by  Lloyd  Lochridge  in  the  Austin  Statesman,  January  2-10 
and  25-27,  1913.  Message  of  Governor  Colquitt,  January  16,  1913. 
Dallas  News,  January  7,  1914.  Austin  Statesman,  June  25,  1914. 
Austin  American,  December  6,  1914.  Grand  jury  charge  of  Judge  W.  L. 
Crawford,  as  reported  in  the  Dallas  News,  January  6,  1916.  Report  of 
the  grand  jury  of  Travis  County,  as  reported  in  the  San  Antonio  Ex- 
press, April  30,  1916. 


256  Bulletin  of  the   University  of  Texas 

ceived  in  one  year  $9,576.35  and  of  a  constable  who  collected 
$9,157.40,  and  returned  nothing  as  excess,  show  the  extrava- 
gance of  the  system.^  The  state  platform  of  the  Democratic 
party  in  1914  called  for  the  abolition  of  the  fee  method  of  pay- 
ing peace  officers.^  In  case  of  officers  like  the  attorney  general, 
county  judges,  county  clerks,  county  and  district  attorneys, 
and  sheriffs,  inasmuch  as  the  constitution  prescribes  the  fee 
system  for  them,  the  method  of  their  compensation  can  not  be 
changed  to  a  straight  salary  basis  without  an  amendment  to  the 
constitution.''  The  principle  of  maximum  compensation  is  now 
followed  quite  generally,  though  the  way  in  which  it  is  applied 
does  not  remove  the  evils  of  the  fee  system.  Since  1897  the 
policy  has  prevailed  of  setting  maxima  to  the  amount  of  fees 
which  may  be  retained  by  the  office  holder,  the  maxima  varying 
according  to  the  population  of  the  county  or  the  population  of 
the  chief  city  of  the  county.  If  there  is  an  excess  above  the 
amount  first  set  as  the  compensation  of  the  officer  and  his  as- 
sistants, the  officer  may  retain  one-fourth  of  the  excess  until  it 
reaches  certain  amounts  which  also  vary  according  to  the  popu- 
lation of  the  county  or  chief  city.  For  example,  the  collector  of 
taxes  in  a  county  which  has  a  population  of  38,000  or  above  or 
which  contains  a  city  of  over  25,000  inhabitants  may  retain  fees 
up  to  $2,750  and  one-fourth  of  the  excess  up  to  $1,500,  making 
a  possible  total  compensation  of  $4,250.*  There  are  certain 
vicious  exceptions  ta  the  present  fee  law,  and,  furthermore,  as 
the  fund  out  of  which  assistants  and  deputies  are  paid  must  be 
raised  from  fees,  the  officers  are  under  all  of  the  inducements 
which  give  rise  to  the  abuses  characteristic  of  the  fee  system. 
The  penitentiaries  have  been  a  source  of  considerable  expense 
to  the  general  treasury  and  their  management  has  been  the  oc- 
casion of  much  concern  to  the  different  administrations.  From 
1849  to  1870  the  state  operated  the  lluntsville  penitentiary  on  its 
own  account,  but  from  1870  to  1883  the  buildings  and  convicts 
were  leased,  and  the  state  was  under  no  expense,  except  for 


'Dallas  News,  March  29,  1914. 

"Message  of  Governor  Ferguson,  January  20,  1915. 

•'Report   and    Opinions   of    the   Attorney    General,    1912-1914,    p.    246. 

'Laws  of  1913,  Reg.  Sess.,  p.  246.     . 


I 


I 


A  Financial  History  of  Texas  257 

buildings  and  for  the  transportation  of  the  convicts.  The 
lessees  during  the  period  1878-1883  paid  the  state  $3.01  per 
month  per  convict.^  The  penitentiary  located  at  Rusk  was 
brought  to  completion  in  the  early  eighties,  and  it  and  the  Hunts- 
ville  properties  and  convicts  were  leased  by  the  penitentiary 
board  in  1882  for  fifteen  years  at  $10,000  per  year  for  each  peni- 
tentiary. This  new  lease  was  at  once  revoked  by  the  legislature, 
and  the  state  resumed  in  1883  the  control  and  management  which 
it  has  exercised  ever  since.  The  two-fold  system  of  leasing  the 
convicts  in  such  numbers  as  the  contractors  desired  and  of  em- 
ploying those  not  leased  upon  the  farms  and  in  the  industries 
of  the  penitentiaries  was  thereafter  adopted  and  was  followed 
until  the  investigations  of  1909  led  to  the  abolition  of  the  lease 
policy.  Abolition  of  the  contract  or  lease  system  became  effective 
January  1,  1914.  The  state  farms  and  factories  are  now  operated 
by  the  convicts,  but  the  institutions  are  not  self  supporting,  and 
in  the  past  they  have  made  heavy  demands  upon  the  general 
revenues.  On  July  1,  1913,  the  debts  of  the  system  amounted 
gross  to  $1,656,835.  Even  with  the  deduction  of  cash  on  hand 
and  bills  receivable,  the  debt  was  well  over  one  million  dollars,^ 
In  view  of  the  debts  and  the  poor  condition  of  the  properties 
the  legislature  in  1913  authorized  the  issue  of  $2,000,000  of  5 
per  cent  bonds,  to  be  secured  by  the  penitentiary  properties, 
except  the  State  Railroad,  and  designated  $1,500,000  of  the  pro- 
ceeds to  be  applied  to  the  payment  of  the  debts  of  the  system, 
and  the  remainder  to  addition  and  improvements.^  In  spite  of 
large  payments  out  of  the  general  treasury  in  1913  and  1914 
the  debt  of  the  system  was  on  January  1,  1915,  $861,845,  and 
the  house  committee  which  investigated  the  penitentiary  was 
uncertain  whether  this  was  all  of  the  debt.*  In  1915  an  appro- 
priation of  $465,000  was  made  to  cover  the  current  expenses  and 
debts  during  the  year  1915.^  Debts  which  represent  paying  in- 
vestments are  productive,  but  those  which  are  incurred  to  meet 
running  expenses  are  unproductive.     Some  of  the  indebtedness 


'Biennial  Report  of  the  Penitentiary  Board,  1880,  p.  10. 
'House  Journal,  33rd  Leg.,  First  Called  Sess.,  p.  53. 
"Laws  of  1913,  Reg.  Sess.,  p.  110. 
'House  Journal,  34th  Leg.,  Reg.  Sess.,  p.  439. 
'Laws  of  1915,  First  Called  Sess.,  p.  114. 

17— H 


"258  Bulletin  of  the   University  of  Texas 

of  the  penitentiary  was  due  to  the  purchase  of  farms  and  other 
productive  property,  but  a  large  part  was  due  to  the  failure  of 
the  system  to  meet  current  expenses.  Unfortunately,  the  books 
of  the  penitentiary  system  have  been  so  poorly  kept  from  the 
accountant's  point  of  view  that  expert  accountants  and  legisla- 
tive investigating  committees  have  never  been  able  to  ascertain 
accurately  the  exact  condition  of  affairs. 

The  possession  of  large  industrial  and  agricultural  properties 
and  the  frequent  undertaking  of  various  industrial  experiments 
have  complicated  the  finances  of  the  system  and  have  proved 
costly  to  the  penitentiary  and  state  treasuries.  At  Rusk  the 
state  owns  iron  ore  lands,  and  between  1883  and  1909  the  chief 
industry  of  the  penitentiary  at  Rusk  was  the  iron  industry. 
Construction  of  the  first  iron  furnace  at  Rusk  began  in  1883 
and  it  started  operations  in  February,  1884.  Owing  to  faulty 
construction,  however,  the  product  was  only  from  eight  to  ten 
tons  of  pig  iron  a  day  instead  of  an  expected  twenty-five  or 
thirty.  The  new  lessees  of  the  convicts  and  industries  at  Rusk 
were  forced  to  terminate  their  contract  on  account  of  the  failure 
of  the  furnace,  and  the  furnace  was  blown  out  in  September, 
1884.^  In  1885  the  legislature  made  an  appropriation  of  $50,000 
to  assist  the  iron  industry,  and  the  furnace  was  started  again  in 
November,  1885.  Because  of  the  insufficient  demand  in  the  state 
for  pig  iron,  foundries  were  established  for  the  manufacture  of 
finished  products.  The  cast  iron  pipe  foundry  began  operations 
in  January,  1887,  and  a  general  foundry  made  castings,  iron 
fronts  for  buildings,  sad  irons,  pots,  kettles,  sash  weights,  etc.- 

Another  blast  furnace  was  erected  at  Ru.sk  in  1897-1898,  but 
before  this  time  the  fundamental  technical  weakness  of  the  East 
Texas  iron  industry  was  apparent.  This  weakness  was  the 
absence  of  fuel  and  limestone.  When  the  industry  was  first 
started  the  timber  supply  for  the  making  of  charcoal,  which 
was  the  fuel,  was  near,  but  in  time  the  readily  accessible  supply 
of  timber  was  exhausted,  and  it  became  necessary  to  go  farther 
and  farther  away  for- it.    The  lime  rock,  which  was  needed  for 


^Biennial  Report  of  the  Penitentiary  Board,  1884,  p.  12. 
-Ibid.,  1888,  p.  12. 


A  Financial  History  of  Texas  259 

smelting,  was  also  brought  in  from,  a  distance.^  In  1902  the 
penitentiary  board  for  the  first  time  pointed  out  that  the  peni- 
tentiary at  Rusk  was  not  making  expenses,  admitted  that  the 
charcoal  iron  of  East  Texas  could  not  compete  with  the  coke 
iron  of  other  iron-producing  centers,  and  recommended  that 
the  iron  industry  should  be  abandoned  by  the  state.-  A  change 
of  administration  occurred,  however,  and  instead  of  abandon- 
ing the  enterprise,  the  legislature  appropriated  $150,000  for 
carrying  it  on,  and  a  new  fifty-ton  furnace  was  erected.  Ill 
luck  immediately  attended  the  revival  of  the  industry  by  the 
failure  of  the  blowing  engine  to  work.  In  1906  charcoal  was 
given  up  for  coke,  and  this  change  of  fuel  made  necessary  a 
rebuilding  of  the  furnaces,  which  in  turn  led  to  a  suspension 
of  operations  for  a  time."  Conditions  for  the  iron  industry 
grew  more  unfavorable  in  1907  and  1908,  when  freight  rates 
on  coke  advanced  and  the  market  for  the  iron  products  slumped 
as  a  result  of  the  panic  of  1907.  The  result  was  that  the  pipe 
foundry  was  closed,  and  the  furnace  was  blown  out.*  Under 
state  operation  these  enterprises  were  financial  failures,  and 
in  order  to  make  the  showing  that  they  did,  the  convicts  were 
overworked.^  During  Governor  Colquitt's  administration  the 
furnace  and  pipe  foundry  were  leased  for  $5,000  a  year,  but 
the  lessees  surrendered  their  contract  after  having  paid  one 
year's  rental  and  having  expended  $30,000  on  repairs.*^  The 
iron  industry  at  Rusk  represents  an  investment  of  more  than 
$200,000,  and  it  now  stands  an  idle,  rusting  mass. 

There  was  also  erected  at  the  Rusk  penitentiary  a  factory 
for  the  commercial  manufacture  of  boxes  and  crates,  and  at 
Huntsville  there  w^ere  constructed  a  machine  shop  and  foundry, 
and  factories  for  the  manufacture  of  boilers,  sheet  metal, 
wagons,  and  furniture.  The  box  and  crate  factory  at  Rusk 
were  closed  down  in  April,  1914.  The  furniture,  wagon,  and 
cotton  goods  factories  at  Huntsville  were  burned  in  1911,  but 


^Ibid.,  1896,  p.  16. 

-Ibid.,  1902,  pp.  11  and  106. 

^'Ibid.,  1906,  pp.  12  and  94. 

*Ibid.,  1908,  p.  13;   ibid.,  1910,  p.  17. 

"^House  Journal,  34th  Leg.,  Reg.  Sess.,  p.  299. 

"Ibid.,  p.  444. 


260  Bulletin  of  the   University  of  Texas 

the  furniture  and  Avagon  factories  were  rebuilt  in  a  temporary 
manner  and  with  much  less  producing  capacity.  Fires  in  the 
penitentiaries  in  1911  and  1913  wiped  out  many  of  the  in- 
dustries and  caused  property  losses  estimated  at  $390,892.^ 
The  penitentiary  has  had  difficulty  in  marketing  its  products, 
owing  to  the  objections  of  the  labor  unions  to  prison-made 
goods  competing  with  the  products  of  free  labor.  All  of  the 
industries,  other  than  the  iron  industry,  are  apparently  capable 
of  successful  operation  at  the  penitentiaries,  and  the  most 
enlightened  principles  of  prison  management  call  for  the 
employment  of  the  prisoners  in  some  useful  and  instructive 
occupations. 

Besides  the  industries  described  above,  the  penitentiary 
system  owns  and  operates  with  convict  labor  a  number  of 
farms.  The  legislature  in  1885  authorized  the  purchase  of  a 
farm  or  farms  for  the  penitentiary  system,  and  in  that  same 
year  the  Harlem  farm  of  2,500  acres  in  Fort  Bend  County  was 
purchased.  This  Avas  the  beginning  of  the  employment  of 
convicts  upon  state  farms.  In  January,  1915,  there  were  owned 
by  the  penitentiary  system  seven  farms,  with  an  aggregate 
acreage  of  31,639,  of  which  there  were  19,509  in  cultivation. 
Besides  these,  the  system  had  under  lease  eij^rht  farms,  with  a 
total  acreage  of  26,458,  of  which  18,996  acres  were  in  culti- 
vation.- During  the  year  1914  there  were  4,600  bales  of  cotton 
produced  on  these  farms,  and  the  value  of  the  cane  crop  worked 
into  sugar  and  molasses  was  $125,000.  On  one  of  the  state 
farms  is  a  sugar  mill,  and  on  another  is  a  syrup  mill,  and 
together  they  represent  a  large  investment.  The  cultivation 
of  cane  and  the  manufactui'e  of  sugar  and  molasses  began  about 
1888.  There  is  considerable  diversity  of  opinion  as  to  the 
profitableness  of  cane  cultivation  on  the  state  farms;  but  as 
to  the  manufacture  of  sugar  and  molasses,  its  abandonment 
has  been  recommended,  if  the  conditions  of  withdrawal  should 
be  favorable.^ 


^Ibid.,  pp.  37  and  52. 

=Ibid.,  p.  40. 

^Report  of  Penitentiary  Investigation  Committee,  July  24,  1913,  in 
House  Journal,  33rd  Leg.,  Reg.  Sess.,  p.  72.  Report  of  Committee  to 
visit  State  Prison  Farms,  February  1,  1915,  in  House  Journal,  34th  Leg., 
Reg.  Sess.,  p.  299. 


A  Financial  History  of  Texas  261 

The  railroad  known  as  the  State  Railroad  was  built  by  con- 
vict labor,  and  for  twenty  years  it  was  administered  as  a  part 
of  the  property  of  the  prison  system.  It  was  begun  at  Rusk 
in  1893  or  1894,  and  the  object  in  its  construction  was  to  secure 
timber  for  the  iron  industry.  Some  seven  miles  were  built  by 
1895.^  During  the  years  1899-1902  it  was  extended  four  miles.^ 
But  in  the  two  years  1903-1904  seven  miles  of  the  road  were 
abandoned,  and  a  new  line  was  begun.  The  object  still  was 
to  reach  timber  for  fuel  for  the  iron  industry.  By  1905  twenty 
miles  were  built,  and  in  1907-1908  the  road  was  extended  to 
Palestine.^  It  has  a  total  length  of  32.5  miles,  and  its  value 
on  June  30,  1915,  according  to  the  state  railroad  commission, 
was  $528,544.  At  this  date  also  there  were  bonds  to  the  amount 
of  $100,000,  and  current  liabilities  of  $539,529  outstanding 
against  the  road.  In  1913  the  management  of  this  railroad  was 
taken  out  of  the  hands  of  the  prison  commission  and  given  to 
a  manager  appointed  by  the  governor."'  The  road  has  never 
paid  operating  expenses,  and  it  represents  an  unwise  and  un- 
profitable expenditure  of  the  state's  money. ^ 

It  has  been  in  connection  with  the  penitentiaries  that  the 
state  has  engaged  in  industrial  enterprises.  The  other  principal 
enterprise  w^as  the  attempt  to  do  the  state  printing.  Neither 
on  the  operating  side  nor  on  the  accounting  side  was  the  record 
such  as  to.  reflect  credit  on  the  state.  There  w^as  a  failure  to 
provide  the  capital  necessary  to  put  industries  on  their  feet, 
unwise  experiments  were  made,  changes  in  prison  adminis- 
tration with  each  change  in  the  occupancy  of  the  governor's 
chair  prevented  continuity  of  policy  and  deprived  the  prison 
system  of  trained  service,  obsolete  machinery  was  used,  cost 
accounting  was  unheard  of  in  the  industries,  and  the  book- 
keeping and  public  reports  were  decidedly  inadequate. 

In  the  reorganization  of  the  penitentiary  system  in  1910 
it  was  provided  that  good  conduct  prisoners  should  receive 
out  of  the  earnings  of  the  prison  the  amount  of  ten  cents  per 


^Biennial  Report  of  the  Prison  Board,  1894,  p.  17. 

=Ibid.,  1900,  p.  66;  ibid.,  1902,  p.  74. 

^Ibid.,  1908,  p.  14. 

*Laws  of  1913,  Reg.  Sess.,  p.  279. 

'^House  Journal,  34th  Leg.,  Reg.  Sess.,  p.  42. 


262  Bulletin  of  the   University  of  Texas 

day  for  the  period  of  their  confinement.^  This  provision  was 
declared  unconstitutional  by  the  attorney  general,  however, 
and  was  therefore  abandoned. - 

Besides  the  penitentiaries,  there  are  two  other  corrective 
institutions.  In  1887  the  reformatory,  or  as  it  is  now  called, 
the  state  institution  for  the  training  of  juveniles,  was  estab- 
lished.^ In  1913  the  state  school  for  the  training  of  dependent 
and  delinquent  girls,  known  as  the  girls'  training  school,  was 
established.* 

The  expenditures  of  the  state  for  general  administrative 
agencies  have  naturally  increased  with  the  growth  of  the  state. 
The  civil  servants  of  the  state  have  grown  greatly  in  numbers, 
but  in  their  selection  for  the  most  part  the  spoils  system  pre- 
vails, and  with  each  change  in  the  governor  or  in  the  elective 
heads  of  departments  there  is  usually  a  turning  out  of  em- 
ployees from  the  janitor  to  the  chief  clerk.  In  1879  the  salaries 
of  all  employees  were  reduced  in  order  to  help  inaugurate  the 
Roberts  ''pay-as-you-go"  policy.  Increases  took  place  there- 
after, but  without  any  uniformity  as  to  the  departments 
affected,  until  1895,  w^hen  reductions  were  again  made,  owing 
to  the  financial  depression  after  the  panic  of  1893,  and  further 
reductions  were  made  in  1897.  In  1901  some  increases  were 
made,  but  there  was  no  uniform  advance  until  1911,  when  the 
effect  of  the  rise  in  the  cost  of  living  upon  the  salaries  of 
employees  seems  to  have  been  recognized  by  the  legislature. 
The  compensation  fixed  originally  in  the  constitution  for  tlie 
governor,  heads  of  departments,  and  members  of  the  legislature 
has  remained  unchanged,  though  conditions  have  materially 
changed.  At  the  time  the  Constitution  of  1876  was  framed 
and  adopted  the  country  was  in  the  depths  of  the  depression 
which  followed  the  panic  of  1873,  and  prices  were  low.  The 
salaries  of  heads  of  departments  which  are  not  laid  down  in 
the  constitution  are  more  generous  than  those  the  constitution 
prescribes,    and    this    works    an    unwarranted    discrimination 


^Laws  of  1910,  p.  143. 

^House  Journal,  34th  Leg.,  Reg.  Sess.,  p.  42. 

'Laws  of  1887,  p.  64.     Laws  of  1889,  p.  193.     Laws  of  1911,  p.  211. 

♦Laws  of  1913,  Reg.  Sess.,  p.   289.     Laws  of  1913,  Called  Sess.,  p.  7. 


A  Financial  History   of  Texas  263 

among  the  heads.  The  salary  of  the  governor,  which  is  $4,000, 
ist  even  with  the  furnished  mansion  and  an  incidental  fund^ 
pitiably  small  for  a  state  like  Texas.^  There  is  little  doubt 
also  but  that  a  smaller  legislative  body,  with  none  of  the 
present  restrictions  on  the  length  of  its  sessions,  and  with  the 
members  paid  an  annual  salary,  as  are  the  members  of  Con- 
gress, w^ould  be  a  beneficial  change  from  the  present  system. 


^Recent  court  decisions  hold  that  the  appropriations  for  groceries 
and  incidentals  for  the  governor's  mansion  are  unconstitutional.  These 
decisions  were  in  the  so-called  "chicken  salad"  case,  which  originated 
in  an  injunction  obtained  by  W.  C.  Middleton  to  restrain  Comptroller 
H.  B.  Terrell  from  issuing  treasury  warrants  to  pay  bills  made  by 
Governor  O.  B.  Colquitt  for  punch,  salad,  etc.,  used  at  a  governor's 
reception,  and  for  other  items  connected  with  the  upkeep  of  the 
governor's  mansion.  The  injunction  was  granted  by  the  lower  court, 
and  was  upheld  by  the  Fourth  Court  of  Civil  Appeals.  See  Dallas. 
News,  June  15,  1916,  p.  10. 


Chapter  3. 
receipts. 

Equally  noteworthy  with  the  growth  of  expenditures  is  the 
growth  of  receipts,  and  this  is  proof  of  the  state's  remarkable 
material  development  since  1880.  The  net  receipts  of  the  state 
government,  including  the  proceeds  of  sales  of  land  which 
accrued  to  the  permanent  funds,  increased  from  $3,076,402  in 
1881  to  $11,248,899  in  1910  and  to  $17,441,744  in  1914.  But 
in  1915  the  amount  was  $15,492,308.  Excluding  the  accounts 
of  the  permanent  funds,  because  they  are  capital  and  not  income 
funds,  total  net  receipts  attained  the  three  million  mark  in 
1880,  the  four  million  in  1886,  the  five  million  in  1888,  the  six 
million  in  1900,  the  seven  million  in  1905;  the  eight  million 
was  reached  and  passed  and  the  nine  million  attained  by  1908, 
the  ten  million  in  1909,  the  twelve  million  in  1912,  and  the 
seventeen  million  in  1914.  Particularly  marked  has  been  the 
increase  since  1905,  that  for  the  ten  years  being  about  eight 
million  dollars  as  compared  with  less  than  three  and  one-half 
million  during  the  preceding  twenty  years.  The  increase  after 
1901  coincided  with  the  entrance  of  the  state  upon  new  regu- 
lative and  developmental  activities  and  the  more  liberal  support 
of  the  existing  institutions. 

Except  in  1885,  when  $200,000  of  bonds  were  sold  in  order 
to  supply  deficiencies  in  the  ordinary,  revenues,  there  were  no 
receipts  during  this  period  from  bond  sales  in  order  to  meet 
current  ordinary  expenditures.  Receipts  of  an  extraordinary 
character — if  not  that,  certainly  of  a  fortuitous  character — 
■were,  to  mention  only  the  more  important,  refunds  by  the 
United  States  Government  on  account  of  expenditures  by  the 
state  for  frontier  defense  and  on  account  of  the  debt  of  the 
Republic  of  Texas,  and  penalties  from  corporations  violating 
the  Texas  anti-trust  law.  Refunds  by  the  Federal  government 
amounted  to  $922,541  in  1888;  $145,037  in  1891;  $101,113  in 
1898 ;  and  $375,418  in  1906 ;  or  a  total  of  $1,544,109.  Penalties 
♦collected  of  corporations  have  been  more  numerous,  but  the 


A  Financial  History  of  Texas  265 

banner  years  were  1909  and  1910,  when  $1,958,815  was  col- 
lected on  judgments. 

Taxes  and  interest  on  investments,  such  as  bonds  and  land 
notes,  constituted  86  per  cent  of  the  total  receipts  in  1881, 
84.6  per  cent  in  1910,  and  94  per  cent  in  1915.  The  percentage 
which  taxes  furnished,  however,  declined  from  81.4  in  1881  to 
67.6  in  1910,  but  rose  again  to  80  in  1914  and  1915.  The  per- 
centage of  interest  rose  from  4.6  in  1881  to  17  in  1910  and  13.4 
in  1915. 

New  sources  of  revenue,  or  sources  that  may  be  considered 
new  because  of  their  marked  modification,  are  many  fees, 
especially  corporation  charter  and  permit  fees,  fees  and  other 
charges  levied  by  educational,  charitable,  and  penal  institu- 
tions; rents  of  lands  belonging  to  the  special  funds;  and  cor- 
poration and  inheritance  taxes. 

Striking  changes  have  taken  place  among  the  receipts  from 
taxes,  and  of  these  the  growth  of  special  taxes  on  corporations, 
or  on  businesses  usually  conducted  under  the  corporate  form 
of  business  organization,  is  the  most  notable.  The  proportion 
of  such  special  taxes  of  total  tax  receipts  increased  from  1.5 
per  cent  in  1881  to  15.6  per  cent  in  1910,  and  was  11.9  per  cent 
in  1915.  The  share  of  general  occupation  taxes  has  decreased 
from  18.5  per  cent  in  1881  to  10.9  per  cent  in  1910  and  7.1  per 
cent  in  1915.  The  proportion  of  poll  taxes  has  fallen  from 
22.9  per  cent  in  1881  to  9.6  per  cent  in  1910  and  6.1  per  cent 
in  1915.  The  proportion  of  the  property  tax  has  increased 
from  56.9  per  cent  of  the  total  in  1881  to  62.5  per  cent  in  1910 
and  to  74.5  per  cent  in  1915.^ 

The  establishment  of  the  office  of  state  revenue  agent  in  1891 
and  of  the  state  tax  board  in  1905  are  the  only  provisions  made 
since  1880  of  new  agencies  to  deal  with  the  revenue  laws.  The 
purpose  of  the  office  of  the  state  revenue  agent  is  that  "of  securing 
a  better  enforcement  of  the  revenue  laws  of  the  state. ' '-  A  strong 
fight  was  made  in  1895  on  the  continuance  of  this  office,  but  it 


^See  Appendix,  table  10,  for  statistics.  The  percentages  are  not 
strictly  of  tax  receipts,  but  some  assessed  taxes  are  included. 

=^Laws  of  1903,  p.  87.  Laws  of  1899,  p.  26.  Rev.  Civil  Stats.,  1911, 
arts.  7366,  7392. 


266  Bulletin  of  the   University  of  Texas 

was  not  abolished,  and  the  activities  of  the  officer  have  been 
mainly  those  of  investigating  the  non-payment  of  occupation 
taxes.^ 

The  state  tax  board  was  created  in  1905,  but  its  duties  of  a 
general  character  were  granted  in  1907.-  It  was  then  given 
authority  to  acquire  '^  information  that  may  in  any  manner  aid 
in  securing  a  compliance  with  any  tax  or  revenue  law  of  this 
stMe,"  ...  of  recommending  "amendments,  changes  or 
modifications  of  the  laws  of  this  state  .  .  .  necessary  or 
proper  to  remedy  injustice  or  irregularity  in  taxation,  and  to 
facilitate  the  collection  of  taxes  and  the  collection  of  public 
revenues."  Practically  the  only  work  of  the  state  tax  board  has 
been,  however,  the  administration  of  the  intangible  assets  tax. 


^Houston  Post,  March  21,  1895.  See  biennial  reports  of  the  state- 
revenue  agent,  1892-1912. 

-Laws  of  1905,  p.  351.  Laws  of  1907,  p.  469.  Rev.  Civil  Stats.,  1911, 
arts.  7407-7426. 


Chapter  4. 
the  operation  of  the  property  tax. 

No  modification  of  this  tax  in  any  of  its  essentials  has  taken 
place  since  1880.  It  remains  a  tax  on  property,  applying  an 
equal  and  uniform  rate  to  all  real  and  personal  property,  except 
such  as  is  exempt.^  Though  there  have  been  no  additions  to  the 
list  of  legal  exemptions,  certain  species  of  property  have  been 
rendered  exempt  by  being  declared  religious  or  charitable.  On 
the  other  hand,  United  States  treasury  notes  and  national  bank 
notes,  both  of  which  were  exempt  by  national  law  in  the  preceding 
period,  became  taxable  in  1895  as  a  result  of  changes  in  the 
Federal  law,  and  also,  the  property  of  the  International  and 
Great  Northern  Railroad  which  had  been  exempted  in  1875  be- 
came taxable  in  1900.- 

The  lists  of  taxable  property  have  been  amended  to  include 
new  species  of  property ;  for  example,  bicycles  and  tricycles  were 
added  in  1895,  and  in  1905  automobiles  were  added  to  the  tax- 
able list." 

Amendments  of  the  laws  exempting  property  have  been  made 
with  a  view  of  defining  more  explicitly  the  exempt  property  of 
religious,  charitable,  educational,  and  public  corporations."^  Thus 
in  1913  the  property  of  the  Young  Men's  Christian  Association 
and  of  the  Young  Women 's  Christian  Association,  including  their 
endowments,  when  not  used  for  profit,  and  the  funds  and  prop- 
erty of  fraternal  benefit  societies,  were  exempted  from  taxation. 


^For  interpretation  of  the  meaning  of  the  words  "equal  and  uniform" 
see  Missouri,  Kansas  and  Texas  Ry.  Co.  v.  Shannon,  100  Tex.,  379 
(1907). 

-Laws  of  1895,  Reg.  Sess.,  pp.  37,  49.  Laws  of  1899,  p.  299.  The 
I.  &  G.  N.  exemption  expired  August  5,  1900,  and  the  property  was 
assessed  and  taxed  for  the  remainder  of  that  year  in  the  proportion 
that  the  remaining  part  of  the  year  was  to  the  whole  year. 

^Rev.  Civil  Stats.,  1911,  art.  7518. 

"Laws  of  1905,  p.  314.  Laws  of  1907,  p.  302.  In  1910  state  farms 
on  which  the  convicts  are  worked  were  made  taxable  for  county  pur- 
poses only;  Laws  of  1910,  Fourth  Called  Sess..  p.  122.  Lav/s  of  191o, 
Reg.  Sess.,  pp.  153,  234.     Rev.  Civil  Stats.,  1911,  art.   7507. 


268  Bulletin  of  the   University  of  Texas 

State  taxes  have  been  released  or  donated  to  counties  and  cities 
suffering  public  calamity  from  fire,  flood,  and  cyclones.^  The  re- 
leases were  for  only  a  year,  except  that  in  1903  all  of  the  state  ad 
valorem  taxes,  three-fourths  of  the  occupation  taxes,  and  all  of 
the  revenue  poll  taxes  accruing  within  the  county  of  Galveston 
were  donated  for  a  period  of  fifteen  years  to  the  city  of  Galveston 
to  be  applied  to  a  trust  fund  to  pay  the  interest  and  contribute 
towards  the  sinking  fund  of  the  debt  incurred  for  raising  the 
grade  of  the  city.- 

Under  the  laws  of  1876  and  1879  assessment  took  place  between 
January  1  and  June  1,  and  collection  began  October  1  and  pay- 
ment was  voluntary  until  March  1,  except  that  taxes  of  non- 
residents were  payable  to  the  comptroller  by  January  1.  In 
1887  the  date  after  which  forced  collection  took  place  was  changed 
from  March  1  to  January  1,  except  that  the  payment  of  taxes 
of  non-residents  at  the  comptroller's  office  was  voluntary  until 
February  1.^  It  was  believed  that  more  money  was  in  circula- 
tion on  January  1  than  on  March  1  and  that  payment  would 
thus  come  easier,  especially  to  farmers,  at  the  earlier  date.  In 
1897  the  time  for  voluntary  payment  was  extended  from  January 
1  to  January  31.  and  in  1909  the  time  of  assessment  was  changed 
so  as  to  occur  between  January  1  and  April  30.*  The  law  at 
present  (1915)  then  is  that  assessment  shall  take  place  between 
January  1  and  April  30  and  that  taxes  are  due  October  1  and 
are  voluntarily  payable  until  January  31. '^ 

A  subject  of  unending,  confused,  and,  for  the  most  part,  in- 
effective legislation  has  been  that  dealing  with  unrendered  lands 
and  delinquent  taxes.  The  provision  in  the  Constitution  of 
1876  for  the  annual  sale  of  land  for  delinquent  taxes  and  the 
legislation  thereunder  in  1876  and  1879  were  expected  to  solve 
the  difficulties  of  enforcement  of  payment  and  to  lead  to  a  "  golden 
flood"  into  the  treasury.  In  1879  the  task  was  imposed  upon 
the  comptroller  of  compiling  lists  which  would  enable  the  com- 
missioners' courts  of  the  organized  counties  to  ascertain  lands 


^Laws  of  1881,  pp.  25,  106.     Laws  of  1882,  p.  31.     Laws  of  1893,  p.  169. 

=Laws  of  1901,  Reg.  Sess.,  p.  298.     Laws  of  1903,  p.  10. 

-Laws  of  1887,  p.  127. 

*Laws  of  1897,  Reg.  Sess.,  p.  132.  Laws  of  1909,  p.  372. 

'Rev.  Civil  Stats.,  1911,  arts.  7508,  7615,  7692. 


A  Financial  History  of  Texas  269 

unrendered  for  taxes  between  1871  and  1876.  By  1882  the  lists 
of  only  forty  counties  had  been  compiled,  and  these  were  so 
defective  because  of  inaccuracies  in  the  records  that  the  collection 
of  the  taxes  was  suspended  until  more  accurate  lists  could  be 
furnished.  Forced  sales  on  the  basis  of  the  inaccurate  records 
would  have  resulted  in  clouds  upon  land  titles  which  only  ex- 
pensive litigation  could  remove.^  The  comptroller  stated  that  it 
was  impossible  to  compile  accurate  lists,  so  in  1884  it  was  left 
to  the  owners  or  agents  of  unrendered  lands  between  1871  and 
1876  to  render  them, — a  confession  of  the  state's  inability  to 
reach  them  and  of  its  withdrawal  from  the  attempt.^ 

In  the  case  of  lands  assessed  but  delinquent  since  January  1, 
1870,  the  legislation  of  1876  and  1879  provided  for  their  seizure 
and  sale,  and  that  if  they  should  not  be  purchased  by  individuals 
at  the  tax  sales,  they  should  be  bid  in  by*the  state.  In  1879  it 
was  made  the  comptroller's  duty  to  forward  to  the  tax  collector 
of  each  county  on  or  before  January  1  a  complete  list  of  all  real 
estate  that  had  been  sold  to  the  state  for  taxes  assessed  since 
December  31,  1876.  The  state  apparently  withdrew  from  the 
attempt  to  collect  forcibly  those  assessed  prior  to  January  1, 
1877.  A  large  amount  of  land  sold  for  taxes  in  1877  was  bid  in 
by  the  state  and  under  the  provisions  of  the  law  it  should  have 
been  sold  at  the  end  of  two  years  as  public  land.  But  before 
sale  could  be  made,  legislation  in  1879  extended  the  time  for  re- 
demption and  these  relief  acts  were  almost  as  regularly  passed 
as  the  legislature  met.  No  successful  effort  to  enforce  the  pay- 
ments of  taxes  on  land  bid  in  by  the  state  was  made  between  1876 
and  1895-7.  Many  of  the  sales  to  the  state  were  erroneous,  be- 
cause taxes  had  been  paid  on  the  land,  but  through  ignorance  of 
the  owner  or  agent,  they  had  been  paid  in  the  name  of  the  wrong 
grantee.  .  Owners  w^aited,  counting  on  more  favorable  induce- 
ments to  redeem,  and  in  the  meantime  they  enjoyed  the  use  of 
the  land  without  payment  of  either  taxes  or  rent.  The  exacting 
requirements  of  the  courts  as  to  the  description  of  lands  for 
assessment,  in  advertisements  for  tax  sales,  and  in  conformity  to 
all  the  minute  details  precedent  to  seizure  and  sale,  destroyed 


^Laws  of  1882,  p.  39. 

^Comptroller's  Report,   1881-2.     Laws  of  1884,  p.   35. 


270  Bulletin  of  the   University  of  Texas 

confidence  in  tax  titles,  and  taxpayers  were  not  prompted  to 
payment,  therefore,  through  fear  of  purchase  by  individuals.^ 

The  amount  bid  in  each  year  by  the  state  is  affected  somewhat 
by  commercial  conditions;  but  for  years  the  laws  were  unques- 
tionably impotent,  and  the  amount  of  taxes  for  which  land  was 
taken  over  by  the  state  increased  from  $38,588  in  1883  to  $100,017 
in  1890  and  to  $184,101  in  1895.  The  subject  was  vigorously 
attacked  in  1895,  and  what  is  known  as  the  .Colquitt  delinquent 
tax  law  was  passed.-  This  law  was  amended  in  1897,  and  was 
responsible  for  an  increase  in  redemptions  and  a  decrease  in  sales 
to  the  state.^  The  amount  bid  in  by  the  state  was  $145,063  in 
1896  and  $107,185  in  1899.  In  1900  there  was  the  enormous 
amount  of  $379,346,  but  it  declined  to  $99,915  in  1906 ;  since  then 
it  has  not  fallen  below  $100,000.  The  right  of  a  delinquent  tax- 
payer to  plead  the  sta1;ute  of  limitation  as  a  defence  against  the 
payment  of  taxes  was  taken  away  in  1895.*  The  features  of  the 
legislation  of  1895  and  1897  were  to  substitute  for  the  old  pro- 
cess of  seizure  and  sale  by  the  collector  the  process  of  suit  for 
the  taxes  in  the  district  court  in  the  name  of  the  state,  and  if 
foreclosure  were  ordered,  an  order  of  sale  followed  and  sale  took 
place  as  in  other  cases  of  foreclosure.  The  law  applied  only  to 
delinquent  taxes  since  January  1,  1885,  those  before  that  date 
being  relinquished  because  of  the  application  of  the  statute  of 
limitations.*^ 

From  1881  to  1893  the  rate  of  interest  chargeable  on  back 
taxes  at  redemption  was  8  per  cent.  In  1893  it  was  reduced  to 
6  per  cent.     Delinquents  took  advantage  of  the  low  interest  rate 


'Comptroller's  Report,  1881-2.  Message  of  Governor  Ross,  Janu- 
ary 20,  1887.  Comptroller's  Report,  1888.  Galveston  News,  April 
5,  1889.  Comptroller's  Report,  1889.  Report  of  the  State  Revenue 
Agent,    1884.      Message  of  Governor  Culberson,   January   16,    1895. 

^Houston  Post,  February  12,  1895.  Laws  of  1895,  Reg.  Sess.,  p.  50. 
Comptroller's  Report,  1896. 

^Laws  of  1897,  Reg.  Sess.,  p.  132.     Comptroller's  Report,  1898. 

*Laws  of  1895,  Called  Sess.,  p.  6.  Rev.  Civil  Stats.,  1911,  art.  7662. 
The  act  of  July  4,  1879  (Laws  of  1879,  Called  Sess.,  p.  15),  however, 
denied  application  of  the  statute  of  limitation  to  taxes  due  the  state, 
a  county,  city,  or  town.  See  Millinger  v.  City  of  Houston,  68  Tex., 
37  (1887). 

■^Rev.  Civil  Stats.,  1911,  arts.  7683-7699  and  7709. 


A  Financial  History  of  Texas  271 

to  defer  payment  and  lend  at  the  higher  commercial  rates  the 
money  which  they  should  pay  for  taxes.  The  Colquitt  law  left 
the  rate  at  6  per  cent,  but  added  a  penalty  of  10  per  cent  on  the 
entire  amount  of  accrued  taxes,  and  otherwise  sought  to  rob 
delinquency  of  its  financial  profitableness.  In  1899  the  financial 
profitableness  was  further  discouraged  iDy  the  provision  that  re- 
demption might  take  place  after  one  year  only  upon  payment 
of  double  the  amount  of  taxes,  interest  and  penalty,  and  all  costs. ^ 
This  double  liability  continued  until  1907,  when  it  was  thought 
to  be  a  deterrent  to  redemption,  and  was  replaced  by  the  pro- 
vision that  payment  of  the  taxes  for  which  sale  was  made,  with 
interest  at  6  per  cent,  all  costs  and  a  penalty  of  10  per  cent  on 
the  amount  of  the  taxes  would  secure  redemption  for  lands  sold 
to  the  state  or  any  city  or  town.^  But  for  lands  sold  for  taxes 
and  bought  in  by  individuals  the  law  was  not  changed  and  re- 
demption may  take  place  within  tw^o  years  upon  payment  of 
double  the  amount  paid  for  the  land.^ 

Since  1895  there,  has  been  a  growing  confidence  in  tax  titles  as 
attested  by  an  increase  in  the  number  of  sales  to  individuals  of 
property  foreclosed  for  taxes.*  The  anomalous  situation  exists, 
however,  that  in  the  case  of  lands  bid  in  by  the  state  there  is  no 
statutory  provision  for  their  sale,  except  in  the  case  of  lands  of 
non-residents  of  unorganized  counties.^  It  is  alleged  that  the 
insufficient  compensation  of  county  and  district  attorneys  when 
they  bring  suit  and  their  exclusive  power  over  enforcement  ha:ve 
resulted  in  negligent  enforcement  of  the  lien  of  the  state  on  real 
property.®     It  was  enacted  in  1879  that  all  real  and  personal 

^Laws   of   1899,   p.   63 

-Laws  of  1907,  p.  282.  Laws  of  1909,  p.  400.  Laws  of  1913,  Called 
Sess.,  p.  25.  Also  Laws  of  1905,  p.  317,  and  Laws  of  1901,  p.  400. 
In  1902  thirty-six  counties  had  not  compiled  records  of  delinquent 
as  called  for  in  the  act  of  1897,  and  in  1905  it  was  made  their  duty 
to  do  so.  Laws  of  1905,  p.  318.  Rev.  Civil.  Stats.,  1911,  arts.  7695, 
7697.     Comptroller's  Report,  1902. 

^Rev.  Civil  Stats.,   1911,  art.   7696. 

^Comptroller's  Report,  1899. 

'^Report  on  Audit,  Organization  and  Methods,  1909,  pp.  79,  90,  91. 
It  appears  also  that  a  tax  title  to  unpatented  school  lands  is  a  very 
cloudy  one,  and  that  the  state's  lien  on  such  lands  is  very  defectively 
secured.     Ibid.,  p.  79. 

•Ibid. 


272  Bulletin  of  the   University  of  Texas 

property  of  a  person  was  liable  for  the  state  and  county  taxes 
due  by  him,  including  taxes  on  real  estate  and  personal  property, 
and  the  poll  tax.^ 

Delinquency  and  insolvency  constitute  waste  and  loss  to  the 
state  in  the  assessment  and  collection  of  taxes  because  assessors 
are  compensated  for  the  assessment  of  the  property.  It  is  de- 
sirable that  delinquency  especially  should  be  vigorously  combated. 
It  is  desirable  also  that  the  expense  of  getting  the  taxes  into  the 
treasury,  or  that  the  expenses  of  assessment  and  collection,  should 
be  at  a  minimum.  In  1883  the  compensation  of  assessors  and 
collectors  was  graduated,  but  no  maximum  to  what  such  officers 
could  receive  was  pre^scribed.-  With  the  growth  in  taxable  values 
and  taxes  collected,  their  pay  became  excessive  in  many  instances.^ 
A  reduction  in  collectors'  fees  was  made  in  1895.*  In  the  general 
revolt  in  1897  against  the  abuses  of  the  fee  system,  the  fees  of 
these  officers  Avere  changed,  and  a  maximum  compensation  was 
fixed. ^  The  maxima  are  graded  roughly  according  to  popula- 
tion of  the  counties,  but  in  order  that  there  may  be  an  incentive 
for  assessment  and  collection  after  the  maxima  have  been  reached, 
it  is  stipulated  that  each  officer  shall  get  one-fourth  of  the  excess 
fees,  the  remaining  three-fourths  accruing  to  the  county  treasury. 

The  waste,  loss,  and  cost  incident  to  asso-sment  and  collection 
of  taxes — including  poll  and  occupation — was  18  per  cent  of  the 
taxes  assessed  in  1882;  19.6  per  cent  in  1887;  18.4  per  cent  in 
1891 ;  22.3  per  cent  in  1895 ;  23.8  per  cent  in  1900 ;  16.5  per  cent 
in  1905 ;  16.2  per  cent  in  1910,  and  16.1  per  cent  in  1915.  The 
high  percentages  in  1895  and  1900  were  due  to  the  great  increase 
in  delinquent  and  insolvent  ad  valorem  and  poll  taxes,  and  the 


^Laws  of  1879,  Reg.  Sess.,  p.  6.  Rev.  Civil  Stats,  of  189.5,  art.  5176; 
Rev.  Civil  Stats.,  1911,  art.  7630.  This  article  reads  as  follows:  "All 
real  and  personal  property  held  or  owned  by  any  person  in  this  state 
shall  be  liable  for  all  state  and  county  taxes  due  by  the  owner  thereof, 
including  taxes  on  real  estate,  personal  property  and  poll  tax;  and 
the  collector  of  taxes  shall  levy  on  any  personal  or  real  property  to 
be  found  in  his  county  to  satisfy  all  delinquent  taxes,  any  law  to  the 
contrary  notwithstanding."     See  also  art.  7528. 

-Laws  of  1883,  pp.  35,  101. 

^Report  of  State  Revenue  Agent,  1894. 

"Laws  of  1895,  Reg.  Sess.,  p.  180. 

"Laws  of  1897,  Called  Sess.,  p.  5. 


A  Fmancial  History  of  Texas  273 

improvement  since  has  been  due  to  the  reduction  in  expenses, 
delinquency  and  insolvency.  The  per  cent  of  expenses,  which 
are  mainly  the  commissions  paid  for  assessment  and  collection, 
to  gross  collections  on  the  tax  roll,  by  which  is  meant  assessed 
taxes  less  erroneous  assessments  and  insolvent  and  delinquent 
taxes,  was  10.4  in  1887;  10.6  in  1891:  11.7  in  1895;  7.6  in  1900; 
7.3  in  1905;  9.1  in  1910,  and  Q.Q  in  1915.  The  effect  of  the  fee 
legislation  of  1897  is  evident  in  the  decline  after  1895. 

The  compensation  of  assessors  is  based  on  the  total  of  assessed 
taxes,  one-half  of  which  is  paid  by  the  state  and  one-half  by  the 
county.  The  fee  of  five  cents  for  assessing  each  poll,  is  paid  by 
the  state.  The  history  of  the  division  of  costs  is  that  in  1850  the 
county  tax  was  limited  to  one-half  of  the  state 's,  and  the  division 
of  the  costs  on  an  equal  basis  of  half  and  half  was  thought  to  be 
reasonable.  This  continued  to  be  the  rule  until  1861,  when  a 
change  was  made,  but  in  1866  it  was  again  provided  that  each 
should  pay  the  same.  Under  the  Constitution  of  1869  the  fees 
of  assessment  and  collection  might  be  added  to  the  taxpayer's 
bill,  and  though  this  was  enacted,  it  was  repealed  immediateljj 
and  a  division  of  the  costs  was  made,  one-third  to  be  borne  by  the 
county  and  two-thirds  by  the  state.^  This  division  remained  the 
rule  from  1871  until  1897,  when  the  present  apportionment  of 
half  and  half  was  enacted.  This  division  was  fair  enough  as 
long  as  the  state  and  county  rates  were  equal  or  nearly  so,  but 
since  county  rates  have  increased  beyond  the  state  rates  the  state's 
share  of  the  expense  is  unduly  large.  It  would  seem  fairer  that 
the  expense  should  be  prorated  according  to  the  interest  which 
each  has  in  the  services  rendered.  It  is  asserted  that  the  com- 
pensation of  collectors  in  the  richer  counties  is  more  than  ade- 
quate, in  the  poorer  counties  less  than  sufficient;  and  that  the 
surplus  fees  turned  into  the  county  treasury  enable  some  counties 
to  be  at  no  expense  for  the  collector's  office.^  Furthermore,  the 
graduation  of  the  collector's  fees,  compensating  them  highly  (5% 
and  4%)  for  the  first  and  easiest  collections  and  much  less  (1%) 


'That  part  of  the  act  of  April  22,  1871,  which  imposed  as  an  additional 
tax  the  fees  of  a  justice  of  the  peace  for  making  assessment  was  repealed 
by  the  act  of  November  29,   1871. 

*Report  on  Audit,  Organization  and  Methods,  1909,  pp.  80-1. 


18— H 


274  Bulletin  of  the   University  of  Texas 

in  the  larger  totals  which  are  accomplished  by  some  effort  aacl 
unpleasantness  usually  deters  collection  of  delinquent  taxes. ^ 
It  is  apparent  that  some  reform  is  needed,  and  those  suggested 
are  putting  the  officers  on  a  salary  basis,  or  having  the  entire 
expense  borne  by  the  counties,  or  separating  state  and  local  sources 
of  revenue.- 

Also  there  is  loss  to  the  state  and,  in  addition,  injustice  to  tax- 
payers as  a  result  of  failure  to  list  property  and  of  undervaluation 
of  that  which  is  listed.  Both  non-rendition  and  undervaluation 
ll^ve  characterized  the  operation  of  the  property  tax  throughout 
the  period  1880-1915.^ 

In  the  assessment  of  real  estate  there  has  been  perennial 
undervaluation.  The  United  States  Census  of  1890  gave  as  the 
true  valuation  of  taxable  real  estate,  $1,130,341,854,  but  the 
assessed  value  of  the  same  was  $523,893,098,  or  46.3  per  cent. 
In  1904  the  true  value  as  given  by  the  census  was  $1,554,714,941, 
and  the  assessed  value  of  all  taxable  real  property  was  $705,- 


^See  special  articles  by  Lloyd  P.  Lochridge  in  the  Austin  Statesman, 
January  2,  3,  4,  5,  7,  8,  9,  10,  25,  26,  27,  1913.  For  legislation  of  1913 
relating  to  the  fees  of  assessors  and  collectors  see  Laws  of  1913,  Reg. 
Sess.,  p.   246.     See  also  Rev.  Civil   Stats.,   1911,  arts.    3871,   3881-3883. 

-Report  of  the  grand  jury  of  Travis  county,  in  the  San  Antonio 
Express,  April  30,  1916.  The  grand  jury  favored  putting  all  officers 
on  a  salary  basis,  and  cited  the  activity  of  the  fee  officers  at  the 
1915  session  of  the  legislature.     See  discussion  fee  system,  ante. 

^Messages  of  Governor  Ireland,  January  15,  1885,  and  January  11, 
1887.  Message  of  Governor  Ross,  January  20,  1887.  Report  of  the 
Comptroller,  1888.  Supplementary  Report  of  the  State  Revenue  Agent, 
1892.  Galveston  News,  February  11,  1893.  Report  of  the  Comptroller, 
1898.  Report  of  the  State  Revenue  Agent,  1898.  Messages  of  Gov- 
ernor Sayers,  January  10,  1901,  and  January  16,  1903.  Report  of  the 
Special  Tax  Commission,  1899.  Reports  of  the  comptroller,  1902  and 
1904.  Message  of  Governor  Lanham,  January  12,  1905.  Messages  of 
Governor  Campbell,  January  16  and  April  16,  1907,  and  January  14^ 
1909.  Messages  of  Governor  Colquitt,  January  18  and  February  22, 
1911,  January  16,  1913,  and  January  12,  1915.  Flagrant  undervaluation 
Is  illustrated  in  the  case  of  a  farm  purchased  by  the  prison  commis- 
sioners. The  state,  through  the  commissioners,  paid  $100,000  for  2,715 
.acres,  but  the  entire  tract  of  7,831  acres  out  of  which  the  state's  pur- 
chase was  taken  had  been  rendered  for  taxes  at  only  $53,080;  House 
Journal,  34th  Leg.,  Reg.  Sess.,  p.  442. 


A  Financial  History  of  Texas  275 

738,721,  or  45.3  per  cent/  In  1912  tlie  estimated  true  value  of 
all  real  property  was  $3,608,063,739,  while  the  assessed  value  of 
all  taxable  property  was  $1,650,198,381,  or  45.6  per  cent.-  It 
has  long  been  the  practice  of  county  assessors  and  commissioners' 
courts  to  protect  their  counties  against  state  taxation  by  low 
valuations  and  high  county  rates,  or  by  such  valuations  as  are 
sufficient  at  the  existing  rates  to  yield  the  necessary  county 
revenue.  Non-rendition  of  money,  credits  and  securities  is  the 
result  of  the  intangible  character  of  such  property  and  of  the 
high  rates  of  taxation. 

The  escape  of  money,  credits  and  securities  from  assessment 
can  not  be  statistically  shown,  though  it  can  be  roughly  estab- 
lished in  the  case  of  money.  The  law  considers  deposits  subject 
to  sight  check  as  cash.^  Deposits  of  individuals  along  with  the 
cash  in  pocket  or  in  the  cash  drawer  are  assessed  as  money  on 
hand.  Continuous  statistics  of  deposits  are  available  only  for 
the  national  banks.  Since  1905  the  amounts  of  individual  de- 
posits in  state  banks  are  available,  but  before  that  date  deposits 
in  the  few  state  banks  chartered  in  the  Reconstruction  period 
and  in  private  banks  were  not  reported  except  partially,  un- 
officially, and  very  occasionally  by  the  Comptroller  of  the  Cur- 
rency. By  comparing  the  amount  of  individual  deposits  in  na- 
tional banks  at  the  date  nearest  to  January  1  with  the  assess- 
ment of  money  on  hand  January  1,  the  evasion  of  money  is  con- 
clusively, though  roughly,  established.* 

^Special  Report  of  the  U.  S.  Census  on  Wealth,  Debt  and  Taxation, 
1907,  p.  41.  It  will  be  noted  that  the  census  does  not  give  the  real 
value  of  taxable  real  property,  but'  only  that  of  all  real  property, 
and  this  latter  amount  includes  the  value  of  some  real  property 
which  is  exempt  from  taxation.  This  must  be  held  in  mind  in  com- 
parisons with  1890,  and  in  judging  of  the  escape  of  real  property  from 
taxation. 

-Report  of  the  U.  S.  Census  on  Wealth,  Debt,  and  Taxation,  1913, 
vol.  1,  pp.  23  and  748.  It  should  be  noted  that  in  1913  as  in  1904 
the    census   does   not    permit   comparisons  with   1890. 

^Campbell  v.  Wiggins,  2  Texas  Crim.  App.,  1  (1892). 

*The  demand  deposits  of  individuals  in  state  banks  on  December  31, 
1909,  were  $28,940,000,  which  added  to  those  in  national  banks  made 
a  total  of  $184,718,000.  Assessed  money  on  hand  was  only  13  per  cent 
of  this  total.     The  deposits  of  individuals   in  state  banks  on  January 


276  Bulletin  of  the   University  of  Texas 

Individual 

Index  Deposits  in  Index 

Money  on  Hand.           No.  National  Banks.  No. 

1880    $7,276,000            100  $     1,832,000  100 

1885 12,435,000            170  8,285,000  452 

1890 14,264,000             197  25,889,000  1.413 

1895 10,689,000            146  36,242,000  1,978 

1900 8,900,000            122  54,246,000  2,961 

1905 11,749,000            161  103,149,000  5.630 

1910 24,546,000            337  169,263,000  9,239 

1914 22,242,000            305  203,855,000  11,127 

Goods,  wares  and  merchandise  are  a  species  of  property, 
which  though  visible  are  because  of  their  complexity  impossible 
of  assessment  by  the  assessor.  The  following  table  shows  the 
amount  assessed  at  selected  dates. 

Index  No. 

1880    $  16,302,000  100 

1885 27,043,000  165 

1890  . ; 29,322,000  179 

1895 31,427,000  192 

1900 37,461,000  229 

1905 50,390,000  309 

1910 88,401,000  542 

1915 100,109,000  614 

Even  the  proverbial  person  who  does  not  get  out  of  the  rain 
knows  that  the  value  of  merchants'  stocks  in  1915  were  more 
than  6.14  times  greater  than  the.y  were  in  1880. 

13,  1914,  the  same  date  as  the  report  of  the  national  banks,  were 
$79,697,000,  and  the  aggregate  of  national  and  state  deposits  was 
$283,552,000.  Assessments  of  money  were  about  7  per  cent  of  this. 
When  one  takes  into  consideration  the  money  not  on  deposit  in  the 
banks,  the  amount  assessed  in  proportion  to  the  amount  assessable 
was  much  below  7  per  cent.  The  writer  fully  realizes  the  limitations 
applying  to  the  use  of  these  statistics,  and  the  amounts  and  per- 
centages are  not  given  as  exact  demonstrations  of  the  escape  of  money. 
The  bank  deposits  of  non-residents  of  the  state  are  not  assessable  here, 
nor  are  public  deposits,  the  deposits  of  exempt  institutions,  nor  the 
deposits  of  other   banks   assessable. 


A  Financial  History  of  Texas  277 

The  laws  have  been  amended  from  time  to  time  to  close  loop- 
holes and  these  changes  reveal  some  of  the  ways  by  which  taxes 
were  evaded.  In  1888  the  practice  of  removing  property  tem- 
porarily from  the  state  in  order  to  avoid  taxation  was  covered 
by  law,  and  in  1891  the  device  of  converting  upon  the  books  of 
banks  taxable  money  into  non-taxable  treasury  notes  was  made 
illegal.^  Livestock  in  pastures  lying  in  more  than  one  county 
had  their  situs  defined  in  1887,  and  in  1905  there  was  legisla- 
tion to  prevent  the  escape  from  taxation  of  timber  on  public 
lands  leased  or  sold.^  The  current  method  of  evading  taxes  on 
money  is  to  have  the  same  converted  into  New  York  exchange 
just  preceding  January  1,  despite  the  fact  that  the  method  is 
declared  to  be  unlawful. 

Reliance,  however,  has  been  placed  upon  strengthening  the 
oaths  which  taxpayers,  assessing  officers,  and  boards  of  equaliza- 
tion must  make.^  The  most  notable  of  all  efforts  of  this  character 
was  made  in  1907  in  the  so-called  "Full  Rendition  Act."*  This 
act  defined  the  standard  of  valuation  of  property  to  be  its  ''rea- 
sonable cash  market  value,"  or  in  case  it  should  have  no  "market 
value"  its  "real  or  intrinsic  value."  The  duty  was  devolved 
upon  assessors  and  county  boards  of  equalization  to  permit  no 
property  to  be  assessed  except  at  these  values;  they  were  put 
under  oath  to  discharge  this  duty,  and  neglect  or  refusal  on  their 
part  to  comply  constituted  malfeasance  in  office  for  which  they 
could  be  removed  from  office  upon  suit  brought  by  the  attorney 
general  or  under  his  direction.  In  1909  it  was  made  the  duty 
of  boards  of  equalization  to  see  that  property  was  rendered  at  a 
"fair  market  value. "^  As  a  res\.lt  mainly  of  the  "full  rendition 
act"  there  was  an  increase  of  $588,825,000  in  the  assessed  values 
of  1908  over  those  of  1907.  The  number  of  acres  of  land  as- 
sessed increased  by  2,383,000;  the  assessed  value  of  rural  real 


ILaws  of  1888,  p.  3.  Laws  of  1891,  p.  39.  Laws  of  1897,  Reg. 
Sess.,  p.  203.     Rev.  Civil  Stats.,  1911,  art.  7545. 

=Laws  of  1887,  p.  109.     Laws  of  1889,  p.  29.     Laws  of  1905,  p.  72. 

^'Laws  of  1897,  Reg.  Sess.,  p.  293.     Laws  of  1907,  p.  459. 

*Laws  of  1907,  p.  459. 

''Laws  of  1909,  p.  372.  Rev.  Civil  Stats.,  1911,  art.  7564.  Arts.  7530 
and  7569  carry*  the  obsolete  expressions  "true  and  full  value"  and 
"reasonable  cash  market  value." 


278  Bulletin  of  the   University  of  Texas 

property  increased  $290,330,000,  the  assessed  value  of  town  and 
city  real  property  increased  $118,620,000.  The  total  increase  in 
the  assessed  value  of  real  estate  was  $408,929,000.  Of  the  re- 
mainder of  the  increase  in  1908,  railroad  property  made  up  $50,- 
039,000 ;  credits  of  others  than  banks  and  bankers,  $15,076,000 ; 
goods  and  merchandise  $15,049,000 :  national  bank  shares,  $13,- 
245,000;  horses  and  mules,  $12,418,000:  miscellaneous  and  other 
items,  $24,065,000.  While  assessed  credits  of  individuals  in- 
creased $15,076,000,  money  assessed  decreased  $4,734,000.  The 
act  thus  affected  chiefly  real  property,  railroads,  tansrible  per- 
sonalty, and  such  intangible  personalty,  like  bank  stock, 
as  is  easily  reached.  Though  designed  to  correct  underval- 
uation of  real  property  and  though  resulting  in  a  very 
large  increase  in  the  assessed  value  of  such  property,  it 
has  not  been  successful.  A  comparison  of  the  average  true 
value  of  agricultural  land  in  each  county  as,  given  by  the  Thir- 
teenth Census  with  the  average  assessed  value  of  lands  and 
buildings  as  given  in  the  report  of  the  state  comptroller  for 
1911,  shows  that  in  only  six  counties  were  assessed  values  as 
much  as  90  per  cent  of  true  values ;  in  seven  counties  they  were 
between  80  per  cent  and  90  per  cent ;  in  thirteen  between  70  per 
cent  and  80  per  cent;  in  twenty-seven  between  60  per  cent  and 
70  per  cent ;  in  forty-three  between  50  per  cent  and  60  per  cent ; 
in  sixty- four  between  40  per  cent  and  50  per  cent ;  in  thirty-nine 
between  30  per  cent  and  40  per  cent :  in  thirty  between  20  per 
cent  and  30  per  cent;  and  in  six  they  were  under  20  per  cent.^ 
Five  of  the  six  counties  which  were  assessed  at  90  per  cent  and 
over  were  in  East  Texas  and  had  comparatively  small  popula- 
tion and  wealth,  while  the  wealthier  counties,  the  famed  black 
land  counties,  fell  as  a  rule  under  50  per  cent.  The  varying  per- 
centages of  assessed  to  true  values  result  in  unequal  taxation 
for  state  purposes,  and  they  clearly  show  the  need  of  some  cen- 


^The  census  excludes  some  lands  which  if  included  would  diminish 
the  average  true  value,  but  it  does  not  include,  as  does  the  comptroller, 
the  value  of  farm  buildings.  If  buildings  were  included,  the  average 
true  value  would  be  much  larger.  The  percentage  of  underassessment 
is,  therefore,  really  much  greater  than  is  shown  above,  because  of 
the  omission  of  buildings  from  the  census  figtires.  The  census  figures 
are  not  accepted  as  accurate,  but  as  nearly  accurate  as  can  be  obtained. 


A  Financial  History   of  Texas  279 

tralized  or  state  control  or  supervision  of  the  assessing  ofificers 
and  county  boards  of  equalization,  if  the  real  property  tax  is  to 
be  retained  for  state  purposes/  This  need  becomes  greater  as 
the  general  revenue  rate  increases  and  as  special  state  taxes,  like 
the  school  and  the  pension  taxes,  come  to  be  employed. 

In  1913  and  1914  in  some  of  the  counties  persons  were  era- 
ployed  by  the  commissioners'  courts  to  unearth  unrendered 
property,  especially  vendor's  lien  notes.  The  contracts  with 
these  ''tax  ferrets"  or  "tax  adjusters"  were  held  illegal,  and 
the  money  collected  through  their  activity  was  refunded.^ 


^Bulletin  of  the  University  of  Texas,  No.  236,  "Some  Corporation  and 
Taxation  Problems  of  the  State,"  p.  124.     Dallas  News,  June  12,  1912. 
-San  Antonio  Express,  February  15,  1914. 


Chapter  5. 
the  rates  of  the  property  tax. 

(1)     State  Bates. 

One  of  the  theories  advanced  in  explanation  of  the  breakdown 
of  the  general  property  tax  as  applied  to  intangible  property  is 
that  the  high  rates  induce  many  owners  of  such  property  to 
evade  the  taxes.     A  review  of  the  rates  is,  therefore,  pertinent. 

In  1881  the  rate  of  taxation  for  state  purposes,  including  pub- 
lic schools,  was  reduced  from  50  cents  to  40  cents  on  the  one 
hundred  dollars'  valuation  of  property.  In  1883  the  constitu- 
tion was  amended  to  provide  that  the  state  rate,  exclusive  of 
the  tax  necessary  to  pay  the  public  debt,  should  never  exceed  35 
cents,  and  that  a  separate  tax,  not  to  exceed  20  cents,  should  be 
levied  for  the  benefit  of  the  public  free  schools.^  In  1912  the 
constitution  was  amended  so  as  to  authorize  a  special  pension 
tax  of  not  more  than  5  cents  on  the  one  hundred  dollars'  valua- 
tion of  property.^ 

The  average  rate  during  the  thirty-five  years,  1880-1915,  was 
33.25  cents  for  state  and  school  purposes  combined.  The  average 
for  the  state  or  general  revenue  purposes  alone  was  17.80  cents, 
and  the  average  for  school  purposes  was  15.45  cents.  In  1888 
the  rate  for  general  revenue  purposes  was  reduced  from  25  cents 
to  10  cents,  owing  to  a  large  refund  by  the  Federal  government, 
but  it  rose  to  20  cents  in  1889.  In  1908  the  rate  was  reduced  to 
6.25  cents,  in  1909  to  5  cents,  and  in  1910  to  4  cents,  as  a  result 
partly  of  increased  valuation  and  partly  of  the  huge  fines  col- 
lected from  the  Waters-Pierce  Oil  Company  and  other  penalized 
corporations.  In  1911  the  rate  went  up  to  12.50  cents,  in  1913 
to  23  cents,  and  in  1915  to  30  cents. "^    Since  1913  a  special  pen- 


^Laws  of  1884,  p.  5.     Constitution,  art.  8,  sec.  9,  and  art.  7,  sec.  3. 

'Laws  of  1911,  Reg.  Sess.,  p.  288. 

'See  Appendix,  table  11,  for  tax  rates.  The  tax  rate  of  55  cents  in 
1915  was  forcefully  and  convincingly  defended  by  Governor  Ferguson 
in  his  Waco  speech  of  June  10,  1916,  as  reported  in  the  Austin 
American,  June  11,  1916. 


A  Financial  History  of  Texas  281 

sion  tax  of  5  cents  has  been  levied,  as  well  as  the  special  school 
tax. 

As  showing  the  importance  of  the  tax  among  the  sources  of 
the  state's  total  tax  receipts,  the  property  tax  constituted  56.9 
per  cent  of  the  total  in  1881,  66.8  per  cent  in  1887,  65.2  per  cent 
in  1891,  61.3  per  cent  in  1901,  62.5  per  cent  in  1910,  and  74.5 
per  cent  in  1915. 

(2)     Local  Rates. 

Numerous  changes  have  been  made  since  1880  in  the  taxing 
powers  of  counties,  towns,  cities,  and  other  subordinate  units. 
In  1880  the  constitutional  tax  limit  of  counties  was  75  cents, 
outside  of  taxes  on  account  of  interest  and  sinking  funds,  and 
except  in  the  case  of  coast  counties.  The  limits  for  towns  and 
cities  were,  according  to  their  class,  25  cents,  75  cents,  and 
$2.50,  except  in  the  case  of  coast  cities  and  except  in  the  case  of 
taxes  for  debts  incurred  prior  to  1876. 

In  1883  section  9  of  article  8  of  the  constitution  was  amended 
so  as  to  give  counties,  towns,  and  cities  the  power  to  levy  a  tax 
not  to  exceed  15  cents  for  roads  and  bridges.  Also,  it  reduced 
the  tax  which  might  be  levied  for  public  buildings  from  50  cents 
to  25  cents,  and  added  streets,  sewers  and  other  permanent  im- 
provements to  the  purposes  for  which  this  25  cents  could  be 
levied.  The  constitutional  tax  limit  of  counties  became  as  a  re- 
sult of  this  amendment  65  cents  as  compared  with  75  cents  form- 
erly, with  the  usual  exception  of  taxes  for  debts  incurred  prior 
to  the  adoption  of  the  amendment  and  taxes  in  coast  counties 
for  seawalls,  etc.  The  statutory  limit  was  accordingly  changed 
and  was  fixed  in  1884  at  65  cents.^ 

In  1885  and  1887  cities  and  towns  incorporated  under  the  gen- 
eral law  were  authorized  to  levy  a  tax  not  to  exceed  25  cents  for 
the  construction  or  purchase  of  public  buildings,  water  works, 
sewers,  streets  and  other  permanent  improvements,  but  it  was 
not  until  1891  that  in  conformity  with  the  amendment  of  1883 
were  they  authorized  to  levy  a  tax  not  to  exceed  15  cents  for 
roads,  street  and  bridge  purposes.^     The  total  taxing  powers  of 


^Laws  of  1884,  p.  67.     See  also  Laws  of  1885,  p.  105. 

'Laws   of  1885,  p.   99.     Laws  of  1887,  p.   37.     Laws  of  1891,  p.  135. 


282  Bulletin  of  the   University  of  Texas 

general  law  cities  of  10,000  population  and  under  became  thus 
fixed  by  statute  in  1891  at  65  cents,  except  the  tax  for  debts  in- 
curred before  1883/  In  1889,  however,  a  new  class  of  general  law 
cities  was  provided  for  under  authority  of  article  11,  section  5 
of  the  constitution,  namely,  cities  of  more  than  10,000  popula- 
tion. General  law  cities  constituting  this  class  were  authorized 
to  levy  a  tax  not  to  exceed  $1.75,  25  cents  of  which  was  for  the 
purpose  of  taking  up  any  floating  debt  contracted  prior  to 
January  1,  1889.-  In  1901  the  provision  of  the  constitution 
permitting  coast  cities  to  construct  seawalls  and  breakwaters, 
was  given  statutory  effect,  and  a  tax  not  to  exceed  50  cents, 
when  voted  by  a  two-thirds  majority  of  the  property  taxpaying 
voters,  was  authorized.^  Legislation  since  1901  affecting  cities 
and  towns  has  changed  the  population  requirements  of  specially 
chartered  cities  and  the  method  of  adoption  and  amendment  of 
charters.  Until  1909  only  cities  having  a  population  of  more 
than  10,000  could  be  chartered  by  special  act,  but  the  amendment 
to  the  constitution  adopted  in  1909  makes  it  possible  for  cities 
having  more  than  5,000  population  to  be  so  chartered.*  Cities 
of  5,000  or  less  may  be  chartered  by  general  law  only.^  An 
amendment  to  article  11,  section  5,  adopted  in  1912,  gave  cities 
of  more  than  5,000  population  the  power  to  adopt  or  amend 
their  charters,  subject  to  such  limitations  as  may  be  prescribed 
by  the  legislature,  and  limited  the  tax  which  they  may  levy  to 
$2.50.  The  Thirty-third  Legislature  in  1913  carried  this  into 
effect  by  the  so-called  Enabling  Act.^  The  commission  form  of 
government  may  be  adopted  by  any  general  law  city,  and  it  may 
be  secured  by  special  law  cities  through  adoption  or  amendment 
of  their  charters,  but  the  taxing  power  of  no  city  is  changed  by 
its  adoption."     A  town  or  village  which  has  more  than  500  and 


^Rev.  Civil  Stats.,  1911,  art.  925. 

"Laws  of  1889,  p.  3.     Rev.  Civil  Stats.,  1911,  art.  926. 

•^Laws  of  1901,  First  Called  Sess.,  p.  23.  Rev.  Civil  Stats.,  1911, 
art.  5585. 

^4rt.  11,  sec.  5. 

'^Art.  11,  sec.  4. 

"Laws  of  1913,  Reg.  Sess.,  p.  307. 

'Rev.  Civil  Stats.,  1911,  title  22,  chap.  15.  Laws  of  1913,  Reg.  Sess., 
p.  36. 


A  Financial  History  of  Texas  283 

less  than  10,000  inhabitants  may  be  incorporated  as  a  town  or 
villas'c,  and  it  may  levy  a  property  tax,  not  to  exceed  25  cents.^ 

The  taxing  power  of  counties  has  been  increased  considerably 
since  1883.  In  1890  article  8,  section  9  of  the  constitution  was 
amended  so  as  to  empower  the  legislature  to  authorize  an  addi- 
tional road  and  bridge  tax  not  to  exceed  15  cents,  and  its  levy 
was  made  subject  to  a  majority  vote  of  the  qualified  property 
taxpayino-  voters.  This  was  carried  into  effect  in  1891.-  In 
1901  the  provision  of  the  constitution  permitting  coast  counties 
to  construct  seawalls  and  breakwaters  was  given  statutory  effect, 
and  a  tax  not  exceeding  50  cents  when  voted  by  a  two-thirds 
majority  of  the  qualified  property  taxpaying  voters,  was  author- 
ized.^ In  1906  article  8,  section  9  was  amended  to  permit  a  jury 
tax  of  15  cents,  and  this  w^as  given  statutory  effect  in  1907.* 
The  present  (1915)  taxing  powers  of  counties  is,  except  for  debts 
incurred  prior  to  the  amendment  in  1883  and  except  in  coast 
counties,  95  cents,  15  cents  of  which  is  subject  to  majority  vote 
of  the  property  taxpaying  voters.^ 

A  feature  of  local  taxation  within  recent  years  is  the  appear- 
ance of  special  districts  of  various  kinds.  Until  the  consti- 
tutional amendment  of  1883,  the  legislature  was  limited  in  the 
creation  of  independent  school  districts  to  cities  and  towns. 
Where  there  w^as  not  an  independent  district  the  community 
school  system,  with  no  special  taxing  power,  was  in  effect.  The 
amendment  of  1883  gave  the  legislature  the  power  to  form 
school  districts  within  the  counties  of  the  state  and  to  authorize 
a  tax  not  to  exceed  20  cents  on  the  $100  valuation  to  be  levied 
in  such  districts  upon  vote  of  two-thirds  of  the  qualified 
property  taxpaying  voters.®  In  1908  article  7,  section  3,  was 
amended,  and  the  maximum  tax  which  could  be  levied  bv  an 


^Rev.  Civil  Stats.,  1911.  art.  1050. 

^'Laws  of  1891,  p.  51.     Laws  of  1913,  Reg.  Sess.,  p.  30. 

^'Laws  of  1901,  First  Called  Sess.,  p.  23. 

*Laws  of  1907,  p.  39. 

^Rev.  Civil  Stats.,  1911,  art.  2242. 

«Art.  7,  sec.  3.  Laws  of  1884,  p.  38.  In  1884,  53  counties  were  ex- 
empted from  the  provisions  of  the  district  system;  in^l885,  90  counties; 
in  1888,  88  counties.  Since  1888  the  number  exempted  has  declined. 
In   1909  the   community  system  was  abolished;    Laws  of  1909,   p.   17. 


284  Bulletin  of  the   University  of  Texas 

independent  school  district  was  increased  to  50  cents.  The 
employment  of  this  tax  was  made  subject  to  a  majority  vote 
of  the  qualified  property  taxpaying  voters/  Article  7,  section 
3,  was  again  amended  in  1909.  The  limit  of  the  taxing  power 
remained  at  50  cents,  but  it  was  provided  that  districts  could 
be  composed  of  territory  wholly  within  a  county  or  in  parts 
of  two  or  more  counties.-  It  was  provided  in  the  amendments 
of  1883,  1907  and  1909  that  the  limitation  upon  the  school 
district  tax  did  not  apply  to  incorporated  cities  or  towns  which 
were  independent  school  districts.  Since  1905  their  limit  has 
been  50  cents,  subject  to  a  two-thirds  majority  vote  of  the 
property  taxpaying  voters.^ 

Pursuant  to  an  amendment  in  1904  of  article  3,  section  52, 
of  the  constitution,  special  districts  for  various  purposes  have 
been  authorized  with  power  to  issue  bonds  and  to  levy  and 
collect  taxes  to  pay  the  interest  and  to  contribute  to  a  sinking 
fund  of  such  bonds.  In  1905  drainage  districts  and  irrigation 
districts,  and  in  1909  road  districts,  navigation  districts,  and 
levee  and  overflow  districts  were  provided  for  by  statute.* 

The  taxing  powder  for  any  or  all  of  these  purposes  is  limited 
by  the  constitutional  provision  that  the  debt  created  shall  not 
exceed  one-fourth  of  the  assessed  valuation  of  real  property 
of  the  district,  and  that  the  total  bonded  indebtedness  of  any 
city  or  town  shall  not  exceed  the  limits  imposed  by  other 
provisions  of  the  constitution.^    School  and  other  districts  which 


^Laws  of  1909,  p.  17. 

^'Laws  of  1911,  Reg.  Sess.,  p.  200.  The  tax  limit  of  both  common 
school  and  independent  school  districts  is  the  same.  Rev.  Civil  Stats., 
1911,  title  48,  chaps.  15  and  16. 

^ev.  Civil  Stats.,  1911,  title  48,  chap.  17. 

*Laws  of  1905,  pp.  212,  235.  Laws  of  1909,  p.  23.  Laws  of  1907,  p. 
78.  Laws  of  1909,  pp.  32,  140,  185.  Laws  of  1909,  p.  271.  Laws  of 
1911,  Reg.  Sess.,  p.  245.  Levee  and  overflow  districts  are  called  "im- 
provement districts."     Laws  of  1913,  Called  Sess.,   p.  89. 

'Art,  3,  sec.  52.  The  other  provisions  of  the  constitution  here  re- 
ferred to  are  the  tax  limits  of  the  several  classes  of  towns  and  cities 
which  are  $2.50  for  special  law  cities  and  25  cents  for  general  law 
cities.  The  issue  of  bonds  and  taxation  therefor  in  the  case  of  all 
districts  is  conditional  upon  a  two-thirds  majority  vote  of  the  property 
taxpaying  voters. 


A  Financial  History  of  Texas  285 

are  subdivisions  of  counties  and  which  make  use  of  the  county 
assessor  for  assessing  district  taxes  can  not  employ  higher  valu- 
ations than  those  for  state  and  county  purposes,  but  this  limi- 
tation does  not  apply  when  they  have  different  assessing  and 
collecting  officers  from  the  county.^ 

It  is  not  possible  to  state  the  total  tax  rate  which  may  be 
imposed  upon  property,  because  of  the  undefined  taxing  power 
for  debts,  the  different  taxing  powers  of  the  coast  and  interior 
counties,  the  several  classes  of  towns  and  cities,  and  the  in- 
clusion of  cities  and  counties  within  districts.  The  average 
ad  valorem  tax  per  $100  of  assessed  valuation  may  be  found, 
however,  though  it  gives  but  an  idea  of  the  real  weight  of 
taxation,  because  the  ratio  of  assessed  to  true  values  of  property 
has  varied  from  decade  to  decade.  The  average  ad  valorem 
tax  rates  for  both  state  and  local  purposes  per  $100  of  assessed 
value  and  per  $100  of  estimated  true  value  were  as  follows: 

Assessed  value.  True  value. 

1860  $0.20  

1870  0.75  

1880  1.43  $0.55 

1890  1.26  0.47 

1902  1.34  0.53 

1912  1.30  0.50 


^Miller  v.  Vance,  180  S.  W.  Rep.,  739   (1915).     See  Rev.  Civil  Stats., 
1911,   arts.    2862    and  2853. 


Chapter  6. 

business  property  taxes. 

The  general  property  tax  applies  to  business  property,  but 
in  the  cases  of  the  property  of  railroads,  insurance  companies, 
and  banks,  rules  of  administration  differ  from  those  applying 
to  other  property. 

A.     Rmlroads. 

The  special  administrative  rules  applying  to  the  tangible 
values  of  railroads  have  not  been  essentially  changed  since 
1876.  A  defect  in  the  earlier  legislation  was  the  lack  of  pro- 
vision for  review  of  rolling  stock  values  by  the  board  of  equali- 
zation of  the  county  where  it  was  rendered  in  gross;  but  this 
was  remedied  in  1885.^  It  was  also  enacted  then  that  interstate 
railroads  should  render  in  this  state  such  proportion  of  their 
total  rolling  stock  as  the  mileage  of  road  in  this  state  was  to 
the  total  mileage  of  the  road. 

The  assessment  of  the  tangible  values  has  remained  un- 
changed in  the  hands  of  the  county  assessors.  An  effort  was 
made  in  1895  to  devolve  upon  the  railroad  commission  the  duty 
of  furnishing  the  assessors  with  the  value  of  the  road  in  each 
county  and  other  information  that  might  be  useful  to  them  in 
their  assessment  of  the  properties,  but  the  bill  to  this  end  failed 
of  passage.^ 

Under  the  existing  system  of  taxation,  each  railroad  company 
on  or  before  April  30  delivers  to  the  assessor  of  each  county 
and  incorporated  city  or  town  through  which  any  part  of  its 
road  runs  or  in  which  it  owns  real  estate,  a  sworn  statement 
which  specifies  the  number  and  values  of  acres  of  land,  the 
length  of  road  and  value  per  mile,  including  right  of  way, 
roadbed,    superstructure,    depots    and    f^rrounds,    all    shops    and 


^Comptroller's  Report,  1881-2.  Laws  of  1885,  p.  30.  In  1883  bills 
were  introduced  for  the  equalization  and  different  assessment  of  rail- 
road property,  but  none  met  with  success.  The  agitation  was  warm 
and  the  lobby  was  strong;   Galveston  News,  February  3,  1883. 

'Houston  Post,  March  21,  1895. 


A  Financial  History  of  Texas  287 

fixtures,  and  all  personal  property  except  rolling  stock.  This 
rendition  is  subject  to  revision  by  the  county  board  of  equali- 
zation.^ The  physical  and  personal  properties  of  a  road  situ- 
ated in  an  unorganized  county  are  rendered  to  the  state  comp- 
troller. On  or  before  April  1  each  railroad  must  deliver  to 
the  assessor  of  the  county  in  which  its  principal  office  is  located 
a  sworn  statement  giving  the  mileage  of  the  road  in  each  county 
and  the  value  of  all  the  rolling  stock.  The  valuation  of  the 
rolling  stock  is  reviewed  by  the  county  board  of  equalization 
and,  if  approved,  is  certified  to  the  state  comptroller,  who  pro- 
rates it  among  the  counties  served  by  the  road  on  the  basis  of 
the  mileage  in  each,  and  each  county's  share  is  added  by  the 
assessor  to  the  assessment  roll.  Subdivisions  of  counties,  such 
as  school  districts,  can  not  use  the  tax  on  rolling  stock.- 

In  1899  and  1900  the  franchises  of  certain  railroads  were 
assessed  separately  under  the  property  tax,  but  upon  being 
tested  in  the  courts  the  assessment  was  disallowed.^ 

In  1905  was  enacted  the  most  important  railroad  tax  legis- 
lation since  that  of  the  passenger  earnings  tax  of  1879.  By 
the  Intangible  Assets  Law. provision  was  made  to  tax  railroads 
on  their  intangible  property,  which  is  declared  to  be  the  differ- 
ence between  the  whole  value  of  the  property  and  the  value 
of  the  tangible  property.  For  the  determination  of  the  intan- 
gible values  a  state  tax  board  was  created,  composed  of  the 
comptroller,  the  secretary  of  state,  and  the  state  tax  commis- 
sioner. Railroad  companies  are  required  by  this  law  to  fill  out 
sworn  statements  of  the  data  with  which  the  board  works. 
The  intangible  values  ascertained  for  each  road  are  certified 
to  the  county  assessors,  the  share  of  each  county  being  in 
accordance  with  its  proportion  of  the  mileage  of  the  road,  and 
they  are  placed  on  the  state  and  county  rolls  and  are  taxed 

^Laws  of  1909,  p.  372.     Rev.  Civil  Stats.,  1911,  arts.  7524-7525. 

^Biennial  report  of  Attorney  General,  1912-14,  p.  632. 

'State  V.  Austin  and  Northwestern  R.  R.  Co.,  94  Tex.  530  (1901). 
The  court  held  that  in  this  case  to  tax  the  franchise  separately  would 
result  in  double  taxation.  It  did  not  hold  that  the  franchise  was  non- 
assessable, but  that  it  had  presumably  already  been  assessed  in  con- 
nection with  the  other  property.  See  also  City  of  Dallas  v.  Street  R.  R., 
95   Tex.,   268    (1902). 


288  Bulletin  of  the   University  of  Texas 

at  the  same  rate  as  other  property.^  For  the  first  year  of  the 
operation  of  this  law  intangible  assets  to  the  amount  of  $152,- 
827,000  were  ascertained,  but  the  county  boards  of  equalization 
reduced  the  amount  actually  assessed  to  $30,803,000,  or  to  20 
per  cent  of  the  amount  found  by  the  tax  board.^  The  law  was 
consequently  amended  in  1907  and  it  was  made  obligatory  upon 
tax  assessors  to  put  on  the  rolls  the  values  ascertained  by  the 
tax  board  and  these  values  were  removed  from  review  or 
change  by  the  board  of  equalization.^  This  law  has  added  a 
very  large  amount  of  property  to  the  tax  rolls.*  It  has  been 
held,  however,  that  intangible  property  can  not  be  taxed  at  a 
higher  per  cent  of  its  true  value  than  is  other  property.** 


^Laws  of  1905,  p.  351.  Rev.  Civil  Stats.,  1911,  arts.  7414-7426.  The 
law  was  sustained  in  M.  K.  and  T.  Ry.  Co.  of  Texas  v.  Shannon, 
100  Tex.,  379  (1907).  It  was  held  (1)  that  intangible  values  are  not 
such  property  as  is  required  by  the  constitution  to  be  assessed  by 
the  county  assessor,  but  that  they  constitute  one  of  the  "other  sub- 
jects" of  taxation  for  the  taxation  of  which  the  legislature  is  au- 
thorized to  provide  by  art.  12,  sec.  17.  It  was  held  (2)  that  the  act 
confers  not  judicial  but  quasi-judicial  powers  upon  the  comptroller 
and  the  secretary  of  state.  And  it  was  held  (3)  that  the  equal  and 
uniform  provision  of  the  constitution  is  not  violated  by  the  act,  be- 
cause this  provision  does  not  mean  that  the  same  method  of  ascertain- 
ing the  value  of  property  shall  be  adopted  in  all  cases. 

-Report  of  the  Tax  Commissioner,  1906. 

•'•Laws  of  1907,  p.  469.  Lively  v.  M.  K.  &  T.  Ry.  Co.  of  Texas,  102 
Tex.,  345    (1909). 

*The  amounts  assessed  were: 

1906,  $31,499,000 

1907,  $171,990,000 

1908,  $173,403,000 

1909,  $174,100,000 

1910,  $174,862,000 

1911,  $174,757,000 

1912,  $162,363,000 

1913,  $168,106,000 

1914,  $162,644,000 

1915,  $156,518,414 

'Lively  v.  M.  K.  &  T.  Ry.  Co.  of  Texas,  102  Tex.,  545  (1909).  Also 
see  M.  K.  &  T.  Ry.  Co.  of  Texas  v.  Kone,  122  S.  W.  Rep.,  424  (1909), 
and  M.  K.  &  T.  Ry.  Co.  of  Texas  v.  Hassell,  57  Texas  Civil  App.,  522 
(1909). 


A  Financial  History  of  Texas  289 

Some  of  the  Texas  railroads  are  assessed  for  taxation  at  a 
higher  valuation  per  mile  than  their  capitalization  per  mile  or 
their  valuation  per  mile  by  the  Texas  railroad  commission. 
For  example,  the  Houston  and  Texas  Central  Railroad  had  in 
1915  stocks  and  bonds  per  mile  of  $25,942  and  was  valued  by 
the  railroad  commission  at  $24,005  per  mile,  but  was  assessed 
for  taxation  at  $28,808  per  mile.^  In  the  case  of  a  number  of 
the  roads  the  railroad  commission's  valuation  is  less  than  the 
assessed  value  for  taxation,  and  both  amounts  are  less  than  the 
capitalization  per  mile  of  line.  The  overcapitalization  of  many 
of  the  Texas  lines  explains  why  the  stocks  and  bonds  so  greatly 
exceed  the  valuations  by  the  commission  and  by  the  tax  officials, 
though  it  is  probable  that  this  excess  over  the  commission's 
valuations  would  not  be  so  great  if  a  revaluation  of  the  roads 
should  be  made.  Some  of  the  valuations  were  made  over  twenty 
years  ago.  It  has  been  contended  that  there  should  be  the  same 
basis  for  capitalization,  for  rate  making,  and  for  taxation.^ 
This  contention  can  not  be  accepted,  however,  because  the  pur- 
poses of  the  valuations  are  quite  different,  and  the  valuations 
are  governed  by  quite  different  principles.  Particularly  is  it 
true  that  a  road  may  be  taxed  at  a  higher  figure  than  that  for 
which  it  may  be  capitalized,  inasmuch  as  the  selling  value — 
which  is  also  the  taxable  value — is  made  up  of  all  the  physical 
and  intangible  elements,  while  for  capitalization  and  rate 
making  some  of  the  intangible  elements  should  be  excluded. 
This  question  has  not  been  raised  for  adjudication  in  Texas, 
but  the  courts  of  other  states  tend  to  hold  that  franchises  which 
cost  the  public  service  corporations  nothing,  good  will,  and 
other  intangible  values  which  do  not  represent  actual  invest- 
ment should  not  be  the  bases  for  charges  or  securities.^ 


^Report  of  the  Texas  Railroad  Commission,  1915. 

-C.  S.  Potts,  Railroad  Transportation  in  Texas,  p.  195.  Report  of  the 
Texas  Welfare  Commission,  1912,  p.  48. 

■''Comparatively  recent  cases  bearing  on  this  question  are  Cedar 
Rapids  Gas  Light  Co.  v.  City  of  Cedar  Rapids,  223  U.  S.,  655  (1912), 
and  Public  Service  Gas  Co.  v.  Board  of  Pub.  Ut.  Comm.,  et  al.  (N.  J.), 
94  Atl.  Rep.,  634    (1915). 


-H 


290  Bulletin  of  the   University  of  Texas 

B.     Insurance  Companies. 

Insurance  companies,  both  domestic  and  foreign,  are,  except 
fraternal  or  benevolent  companies,  subject  to  taxation  by  the 
property  tax  on  their  real  and  personal  property ;  but  on  account 
of  the  need  of  the  definition  of  their  debts  and  also  on  account 
of  the  requirement  of  the  deposit  of  securities  with  the  state 
treasurer,  special  legislation  has  been  found  to  be  necessary  to 
define  what  personal  property  is  taxable  and  what  its  situs  is 
for  taxation. 

Interest  in  this  state  in  the  taxation  of  insurance  companies 
has  increased  greatly  since  1903,  when  there  began  the  prolific 
insurance  legislation.  In  1903  companies  for  mutual  insurance 
against  loss  or  damage  by  fire,  lightning,  and  storms  were  au- 
thorized to  be  chartered,  and  it  was  provided  that  no  other  tax 
should  be  required  of  such  companies  than  one  of  one-half  of  one 
per  cent  on  all  gross  premiums.^  Fraternal  beneficiary  associa- 
tions, domestic  or  foreign,  are  declared  to  be  charitable  and 
benevolent  institutions  and  all  their  funds  and  assets,  except  real 
estate  and  office  equipment,  are  exempt  from  state,  county,  and 
municipal  taxation.-  Domestic  life,  accident,  and  health  com- 
panies, and  domestic  co-operative  life  insurance  companies  are 
taxable  on  their  real  and  personal  property  less  reserve.^ 

Foreign  fire  insurance  companies  must  either  file  a  bond  or  de- 
posit securities,  and  domestic  life,  accident,  health,  fidelity,  guar- 
anty, surety,  and  casualty  companies,  and  domestic  mutual  fire, 
storm  and  lightning  companies  must  deposit  securities  with  the 
state  treasurer  as  a  condition  precedent  to  doing  business  in  the 
state.  But  it  is  specifically  provided  only  in  the  case  of  domestic 
life,  accident,  and  health  companies  that  the  situs  of  all  personal 
property  for  state,  county,  and  municipal  taxation  shall  be  at 
the  home  office.^ 

In  1907  the  condition  was  imposed  upon  all  domestic  or  foreign 
stock  or  mutual  life  companies  to  invest  not  less  than  75  per  cent 

^Laws  of  1903,  p.  166. 
=^Laws  of  1909,  p.  357. 

'Laws  of  1909,  pp.  192  and  285.  Rev.  Civil  Stats.,  1911,  arts.  4764  and 
4825. 

*Laws  of  1909,  p.  192.     Rev.  Civil  Stats.,  1911,  art.  4749. 


A  Financial  History   of  Texas  291 

of  their  legal  reserve  against  policies  of  Texas  citizens  in  Texas 
securities  or  Texas  real  estate.^ 

All  insurance  companies,  except  domestic  life,  fraternal  benefit 
associations,  and  mutual  fire  companies  are,  in  addition  to  the 
taxes  on  their  real  and  personal  property,  subject  to  an  occupa- 
tion tax  on  their  gross  receipts  from  premiums  upon  property 
and  persons  in  this  state." 

C     Banks  and  Bankers. 

Until  1905,  when  as  a  result  of  an  amendment  to  the  constitu- 
tion state  banks  were  authorized  to  be  incorporated,  the  only 
banks  in  the  state  were  national  banks,  private  banks,  and  the 
state  banks  chartered  under  the  Constitution  of  1869.  Special 
definition  of  the  taxable  personal  property  of  banks  has  been 
found  to  be  necessary.  Under  the  legislation  of  1876  they  w^re 
taxable  on  their  real  estate  and  tangible  personalty,  and  on  so 
much  of  their  other  personal  property  as  remained  after  de- 
ducting the  sum  of  deposits,  accounts  payable,  bonds  or  other 
securities  exempt  by  national  and  state  laws,  from  the  sum  of 
money  on  hand,  in  transit,  or  in  the  hands  of  others  subject  to 
draft,  checks,  and  other  cash  items,  bills  receivable  and  other 
credits  due  or  to  become  due,  and  stocks  and  bonds  of  every  kind.^ 
The  statutes  in  1879  erroneously  failed  to  include  bills  receivable 
and  other  credits,  and  this  was  not  corrected  until  1883.*  In 
1883  separate  provision  was  made  for  national  banks.  It  was  then 
required  that  some  officer  of  a  national  bank  should  furnish  the 
assessor  with  a  list  of  the  shareholders  and  the  amount  of  the 
shares  of  each,  and  that  shareholders  should  render  to  the 
assessors  the  number  and  value  of  their  shares.  National  banks 
were  required  to  render  all  real  estate  and  personal  property 


^Laws  of  1907,  p.  316.     Rev.  Civil  Stats.,  1911,  art.  4775. 

*Laws  of  1911,  Reg.  Sess.,  p.  216. 

^Laws  of  1876,  p.  279. 

^Comptroller's  Report,  1881-2.     Laws  of  1883,  p.  111. 


292  Bulletin  of  the   University  of  Texas 

except  such  as  was  exempt  by  the  laws  of  the  United  States.^ 
The  method  of  taxing  shareholders  was  unsatisfactory  and  was 
changed  in  1885.  It  was  then  provided  that  each  share  of  a 
national  or  of  a  state  bank  should  be  taxed  only  for  the  difference 
between  its  actual  cash  value  and  the  proportionate  amount  per 
share  at  which  the  real  estate  was  assessed.^  The  Revised  Statutes 
of  1895  made  no  distinction  between  state  and  national  banks, 
but  there  was  later  an  amendment  to  cover  this  error. ^  There 
was  frequent  complaint  that  banks,  especially  private  banks, 
evaded  taxation,  but  in  1897  a  penalty  was  provided  applying 
only  to  national  banks  for  failure  or  refusal  to  furnish  to  the 
assessor  a  statement  of  the  assets  and  liabilities  of  the  bank.* 

Though  the  chartering  of  state  banks,  savings  banks,  and  trust 
companies  was  authorized  in  1905,  there  were  no  corresponding 
changes  made  in  the  tax  laws  until  1911.  State  and  private  banks 
were  taxed  by  one  method,  national  banks  by  another.  In  1911, 
however,  the  same  method  was  applied  to  both  state  and  national 
banks,  which  is  that  the  real  estate  is  taxable  to  the  banks,  while 
the  shares  are  taxable  to  the  shareholders  at  their  actual  value 
less  the  proportionate  amount  per  share  at  which  the  real  estate 
is  taxed.^  Bank  shares  may  not  be  assessed  at  a  greater  percentage 
of  their  true  value  than  other  property  is  assessed.  Because  of 
the  ease  of  assessment  of  bank  shares,  there  is  no  form  of  in- 
tangible property  which  is  so  completely  reached  for  taxation  as 


'Exempted  by  the  laws  of  the  United  Statea  were  United  States 
bonds,  United  States  notes,  and  national  bank  notes.  Rev.  Stats,  of 
U.  S.,  3701.  In  1894  United  States  notes  and  national  bank  notes 
were  declared  subject  to  taxation  under  state  laws.  28  U.  S.  Stats.  L., 
278.  Restrictions  on  the  taxation  of  national  bank  shares  were  that 
it  should  not  be  at  a  greater  rate  than  was  assessed  upon  other  monied 
capital  in.  the  hands  of  individuals  and  that  the  shares  owned  by 
non-residents  of  a  state  should  be  taxed  only  in  the  city  or  town  of 
the  location  of  the  bank.  13  U.  S.  Stats.  L.,  99;  15  U.  S.  Stats.  L.,  34. 
U.  S.  Rev.  Stats.,  5219. 

=Laws  of  1885,  p.  106.  Rosenberg  v.  Weekes,  67  Tex.,  578  (1887). 
Gillespie  v.  Gaston  &  Thomas,  67  Tex.,  599  (1887). 

^Laws  of  1895,  Reg.  Sess.,  p.  38. 

*Com-*roller's  Report,   1888.     Laws  of  1897,  p.   157. 

^127  S.  W.  Rep.,  1083.  "Instructions  to  the  Tax  Assessors,"  issued  by 
the  comptroller's  department,  1911.  Rev.  Civil  Stats.,  1911,  arts.  7521- 
7522. 


A  Financial  History  of  Texas  293 

are  they.     The  growth  of  banks  in  the  state  has  been  phenomenal 
and  has  tended  to  simplify  the  taxation  of  monied  capital.^ 

D.     Other  Businesses. 

The  intangible  assets  tax  of  1905  was  made  to  apply  not  only 
to  railroad,  ferry,  bridge,  and  turnpike  or  toll  road  companies, 
but  also  to  wharf,  telegraph,  interurban  railroad,  express,  packing 
house  and  pipe  line  companies,  chair  and  all  other  car  companies, 
except  sleeping,  palace  and  dining  car  companies.  It  was  pro- 
vided, however,  that  upon  compliance  with  this  tax  law  the  gross 
receipts  tax  law  should  not  apply.-  The  companies  other  than 
the  railroad  generally  elected  to  comply  with  the  gross  receipts 
law.  The  difficulties  experienced  by  the  state  tax  board  ii;i  determ- 
ining the  intangible  property  of  the  companies  and  the  greater 
simplicity  of  the  gross  receipts  tax  led  to  a  change  in  the  law  in 
1907,  by  which  only  railroad,  ferry,  bridge,  and  turnpike  or  toll 
road  companies  remained  subject  to  the  intangible  assets  tax,  the 
other  companies  being  brought  under  the  gross  receipts  tax.^ 

^Year  No.  of  na-  Capital  stock  No.  state  banks  Capital  stock 

tional  banks.  and  surplus.  and  trust  cos.  and  surplus. 

1866  4  $      452,000  ...                    

1875  10  1,460,000  ...                    

1880  13  1,579,000  ...                   

1885  68  8,882,000  ...                   

1890  189  25,760,000  ...                   

1895  214  26,325,000  ...                    

1900  223  25,337,000  ...                   

1905  440  *  42,756,000  29  $  1,936,000 

1910  519  65,745,000  621  22,821,000 

1912  515  72,096,000  728  31,176,096 

^Message  of  Governor  Lanham,  January  12,  1905.  Laws  of  1905,  p. 
351. 

'Laws  of  1907,  p.  469.  Report  of  the  Tax  Commissioner,  1906  and  1908. 
The  franchise  and  other  intangible  properties  of  the  companies  not 
subject  to  the  intangible  assets  tax  are  taxable,  though  there  is  no 
special  method  provided  for  ascertaining  apd  assessing  -them.  Laws 
of  1905,  p.  357.  Rev.  Civil  Stats.,  1911,  art.  7414.  Dallas  v.  Street 
Railway.  95  Tex.,  268    (1902). 


Chapter  7. 
general  occupation  or  license  taxes. 

IThtil  1907  Texas  had  a  very  extensive  system  of  license  taxes. 
There  was  considerable  increase  of  these  taxes  in  1879  over  the 
rates  prevailing  in  1876,  and  in  1881  when  a  reduction  of  tax- 
ation became  possible,  reduction  was  made  in  the  ad  valorem 
rather  than  in  the  license  taxes.^  General  revisions  of  the  rates 
were  made  in  1881,  1882,  1889  and  1897.  As  some  one  hundred 
and  twenty-five  different  items  were  concerned,  it  is  impossible 
to  follow  the  changes  in  each  one. 

The  famous  Bell  Punch  Law  enacted  in  1879  to  apply  ta 
liquor  dealers  was  a  failure  and  a  scandal  and  was  repealed  in 
1881.2  Keplacing  it  were  fixed  license  charges  of  $300  and  $200, 
according  as  liquor  was  sold  in  quantities  of  less  than  one  quart, 
more  than  five  gallons,  and  one  quart  and  less  than  five  gallons, 
and  a  charge  of  $50  for  the  sale  of  malt  liquor  only.^  In  1897 
the  privilege  of  selling  liquor  upon  prescription  in  local  option 
territory  was  made  taxable  at  $200.*  In  1907  the  rates  for  deal- 
ers of  liquor  in  any  quantity,  including  those  selling  upon  pre- 
scription, were  raised  to  $375  and  the  rate  for  malt  dealers  ex- 
clusively was  increased  to  $62.50.'' 

The  tax  of  $200  on  commercial  travelers,  known  as  ''the  Drum- 
mers' Tax,"  and  imposed  in  1879,  was  reduced  to  $50  in  1881 
and  $35  in  1882,  and  was  severed  of  any  connection  with  the 
occupation  tax  on  merchants.     In  1888  it  was  held  by  the  Su- 


^Message  of  Governor  Roberts,  January  13,  1881.  For  criticism  see 
Galveston   News,   January   14,   1881. 

*Laws  of  1881,  p.  21.  Galveston  News,  January  14,  1881,  speaking 
editorially  of  this  law  said  the  urgent  thing  was  "to  get  rid  of  the 
enormous  scandal  of  its  corpse  putrefying  in  the  midst  of  the  state's 
statutes  and  administrative  functions  and  polluting  far  and  wide  the 
moral  atmosphere."  See  also  the  message  of  Governor  Roberts,  Jan- 
uary 11,  1881. 

^Laws  of  1893,  p.  177.  Francois  Giozza  v.  Patrick  Tiernan,  148 
U.   S.,   657    (1893). 

^Laws  of  1897,  Reg.  Sess.,  p.  223. 

''Laws  of  1907,  p.  258.  Rev.  Civil  Stats.,  1911,  art.  7427. 


A  Financial  History   of  Texas  295 

preme  Court  of  the  United  States  to  be  an  unconatitulional  in- 
terference with  interstate  commerce,  in  so  far  as  it  applied  to 
drummers  representing'  foreign  houses  or  houses  doing  business 
in  other  states.^  It  was  not  re-enacted  so  as  to  apply  only  to 
drummers  of  domestic  houses  doing  a  state  business. 

The  tendency  of  legislation  dealing  with  the  license  taxes  has 
been  to  reduce  the  taxes  on  the  so-called  useful  occupations  and 
to  increase  those  on  pursuits  which  smack  of  quackery  and 
charlatanry  or  which  are  regarded  as  socially  harmful.  The 
taxes  on  merchants  were  decreased  in  1881  and  1882,  and  until 
1889  there  were  seven  classes  of  merchants  on  the  basis  of  the 
amounts  of  their  purchases  of  merchandise.  In  1889  four  classes 
were  added  and  the  maximum  tax  was  made  $300  instead  of  $125. 
There  remained  eleven  classes  with  rates  varying  from  $3  to 
$300  until  the  taxes  were  repealed  in  1907.  The  other  occupa- 
tions relieved  in  1907  of  a  license  tax  were  bankers  and  brokers ; 
cotton,  wool,  and  hide  buyers;  dealers  in  cotton  seed  products; 
dentists  in  the  county  of  their  residence ;  grain  elevators ;  hacks: 
and  other  vehicles  for  hire;  local  insurance  agents;  land  agents; 
steam  laundries;  lawyers;  livery  and  feed  stables;  photograph 
galleries ;  toll  bridges ;  and  wagon  yards.-  The  receipts  from  the 
taxes  on  the  occupations  thereafter  exempt  amounted  in  1907  to 
$249,175.  The  tax  on  resident  physicians  and  surgeons  was  re- 
pealed in  1899.  The  taxes  which  remain  may  be  divided  into 
five  general  classes: 

(1)  Those  on  occupations  supplying  amusements  or  pleasure. 
Under  these  fall  nine  and  ten  pin  alleys,  baseball  parks,  cir- 
cuses,^ concerts,  exhibitions  of  acrobats,  menageries,  wax  works, 
sleight-of-hand  performances,  exhibitions  given  by  medicine,, 
electric  belt  and  such  like  vendors;  flying  jennies,  phonograph, 
graphophone,  and  motion  picture  shows;  knife,  cane,  doll  and 
othei"  such  racks;  race  tracks,  shooting  galleries,  skating  rinks,, 
and  theaters.  The  arguments  in  support  of  the  taxation  of  these 
occupations  are   that   those   engaged  in   them  have  tax  ability 


^Ex-parte  Asher,  23  Texas  Crim.  App.,  662    (1887).     Asher  v.  Texas, 
128  U.  S.,  129   (1888). 

^Laws  of  1907,  p.  57.     Rev.  Civil  Stats.,  art.   7355. 
^Laws  of  1911,  p.  142. 


296  Bulletin  of  the   University  of  Texas 

which  cannot  be  reached  by  the  property  tax,  and  that  in  the 
case  of  several  they  are  occupations  which  need  either  discourage- 
ment or  slight  repression.  Exhibitions  by  associations  for  the 
promotion  of  art,  science,  and  charity,  concerts  given  for  charit- 
able or  literary  purposes,  and  museums  composed  entirely  of  the 
products  of  Texas  are  exempt  from  the  payment  of  occupation 
taxes. 

(2)  Those  on  peripatetic  occupations.  Among  these  are  ped- 
dlers; canvassers;  traveling  vendors  of  patent  medicines;  trav- 
eling medical  specialists,  surgeons,  oculists,  and  other  specialists ; 
and  itinerant  merchants  selling  bankrupt  stocks.  Peddlers 
of  literature,  poultry,  vegetables,  fruits  or  other  country  pro- 
duce exclusively  are  exempt,  as  are  also  salesmen  for  merchants 
engaged  in  the  wholesale  drug  business.  The  act  of  1897  ex- 
empted from  the  peddlers'  tax  the  blind,  deaf  and  dumb, 
wounded  persons,  those  who  had  lost  a  hand  or  a  foot,  and  ex- 
Confederate  and  ex-Federal  soldiers;  but  these  exemptions  were 
held  to  be  in  violation  of  the  "equal  and  uniform"  provision 
of  the  constitution  and  therefore  invalid.^ 

The  explanation  for  these  taxes  is  that  the  occupations  are  not 
easily  reached  by  the  property  tax"  and  that  they  compete  with 


^Ex-parte  Jones,  38  Texas  Crim.  Rep.,  482  (1897).  That  part  of  the 
act  of  1897  taxing  peddlers  of  clocks,  cooking  stoves,  washing  machines, 
churns,  wagons  and  other  veliicles  $350  and  exempfing  from  this  special 
tax  merchants  who  had  paid  the  merchants'  occupation  tax  of  less 
amount  was  declared  unconstitutional;  Ex-parte  Overstreet,  39  Texas 
Crim.  Rep.,  474  (1898).  The  occupation  tax  act  was  amended  'n  1899 
to  conform  to  these  decisions.  Traveling  vendors  of  tinware  and 
earthenware  were  dropped  from  the  exempt  list  by  this  amendatory 
act;  Laws  of  1899,  p.  201.  A  tax  which  was  first  levied  by  the  oc- 
cupation tax  law  of  1881  and  which  applied  to  solicitors  of  orders  for 
photographs,  enlarged  crayon  pictures  and  the  like,  was  declared  an  un- 
constitutional interferences  with  interstate  commerce  when  applied  to. 
solicitors  of  a  foreign  corporation;  Ex-parte  Holman,  36  Texas  Crim. 
Rep.,  255  (1896).  It  was  also  held  in  French  v.  State,  42  Texas  Crim. 
Rep.,  222  (1900),  that  a  peddler  of  organs  for  an  organ  company  of 
another  state  was  not  liable  for  a  state  occupation  tax  when  he  sold 
organs  in  the  original  package  as  it  were;  but  this  decision  was  over- 
ruled in  Saulsburry  v.  State,  43  Tex.  Crim.  Rep.,  90  (1901),  the  court 
following  Emert  v.  Missouri,  156  U.  S.,  296  (1894). 


A  Financial  History  of  Texas  297 

the  established  local  business  houses  and  the  settled  professional 
men. 

(3)  Those  on  persons  engaged  in  the  commission  business,  on 
cotton  brokers,  merchandise  brokers,  electric  light  companies, 
gas  companies,  ice  dealers,  credit  associations,  insurance  adjust- 
ers, industrial  insurance  agents,  lightning  rod  dealers,  auction- 
eers, money  lenders,  pawnbrokers,  sewing  machine  dealers,  ship 
brokers,  street  railways,  and  water  works.^  Revenue  is  the  chief 
consideration  in  the  imposition  of  these  taxes,  and  in  the  case 
of  many  of  them  there  is  tax  ability,  but  little  property  to  be 
reached  by  the  property  tax.  There  are  also  certain  charges 
levied  in  connection  with  the  state  regulation  of  the  fish  and 
oyster  business  which  are  to  be  considered  as  occupation  taxes 
rather  than  as  license  fees,  and  which  fall  under  the  present  class 
of  occupation  taxes.  The  regulation  of  coast  fishing  and  oyster- 
ing  goes  back  to  1895,  and  there  have  been  many  changes  in  the 
restrictions  and  charges  imposed.  Until  1903  the  occupation 
tax  upon  any  one  fishing  for  the  market  within  the  public  coast 
waters  was  on  the  basis  of  the  fathoms  of  seines  and  nets  used, 
and  the  charge  upon  those  engaged  in  gathering  oysters  was  on 
the  basis  of  the  pairs  of  tongs  used.-  The  act  of  1903  adopted 
as  a  basis  the  weight  of  the  fish  and  oysters.  In  1903  also  there 
was  introduced  an  annual  license  charge  of  $1  for  each  person 
engaged  in  the  business  of  fishing,  but  in  1905  this  was  succeeded 
by  a  license  charge  of  $10  per  fishing  boat.^  In  1909  a  tax  upon 
wholesale  dealers  in  fish  and  oysters  was  introduced.*  The 
charges  in  effect  in  1914  were  a  tax  of  one-fifth  of  one  cent  per 


^The  tax  in  the  act  of  1897  upon  cotton,  wool  and  hide  buyers,  bui 
exempting  merchants  who  had  paid  the  occupation  tax  on  merchants, 
was  declared  to  be  lacking  in  uniformity  and  therefore  unconstitutional; 
Poteet  V.  State,  41  Texas  Crim.  Rep.,  268  (1899).  A  tax  on  barbers 
imposed  in  1907  was  held  to  be  unconstitutional  as  being  an  occupation 
tax  on  a  mechanical  pursuit;  Jackson  v.  State,  55  Texas  Crim.  Rep., 
557  (1909).  The  tax  imposed  by  the  act  of  1897  on  sewing  machine 
peddlers  when  the  merchant  dealer  was  exempted  was  held  to  be 
unconstitutional;  Ex-parte  Fritz  Bockhorn,  62  Texas  Crim.  Rep.,  651 
(1911). 

^Laws  of  1895,  Reg.  Sess.,  p.  170.  Laws  of  1899,  p.  312.  Laws  of 
1903,  p.  189. 

'Laws  of  1905,  p.  128.  This  tax  was  upheld  in  Raymond  v.  Kibbe, 
43  Texas  Civ.  App.,  209    (1906).     Laws  of  1907,  p.  233. 

*Laws  of  1909,  p.  325. 


298  Bulletin  of  the   University  of  Texas 

pound  on  all  fish,  turtle,  terrapin,  and  shrimp  taken  for  market 
from  the  public  coast  waters;  a  tax  of  two  cents  per  barrel  on 
oysters  gathered  from  the  natural  reefs  or  private  oyster  beds 
within  the  public  coast  waters ;  a  chargfe  of  $1  for  a  boat  license 
to  eng^age  in  the  business  of  fishing  or  of  gathering  oysters;  and 
a  tax  upon  wholesale  dealers  in  fish  and  oysters  of  $1  for  each 
one  thousand  pounds  of  fish  and  of  one  cent  per  barrel  of 
oysters/  These  taxes  were  payable  to  the  game,  fish,  and  oyster 
commissioner  or  his  deputies,  and  by  him  were  turned  over  to  the 
state  treasury. 

Hunting  licenses  began  to  be  required  in  1907.  The  charge 
upon  a  non-resident  of  the  state  was  $15,  payable  to  the  game, 
fish,  and  oyster  commissioner;  the  charge  for  hunting  outside 
one's  county  was  $1.75,  payable  to  the  county  clerk,  who  in  turn 
remitted  all  but  twenty-five  cents  to  the  game,  fish,  and  oyster 
ccmmissioner.- 

Neither  the  report  of  the  game,  fish,  and  oyster  commissioner 
nor  the  report  of  the  comptroller  itemizes  the  receipts  as  to 
sources,  and  it  is  therefore  not  possible  to  separate  taxes,  fees, 
fines,  and  rents.  The  total  receipts  in  1914  were  $42,540;  the 
total  disbursements  were  $41,258. 

(4)  Those  on  occupations  which  are  regarded  as  socially 
harmful  or  in  need  of  regulation.  These  include  billiard  and 
pool  halls,  beer  and  liquor  saloons,  cigarette  dealers,  selling  pools 
on  horse  races  and  other  contests,  clairvoyants,  mesmerists  and 
fortune  tellers.  Revenue  and  sumptuary  considerations  prevail 
in  the  taxation  of  these  occupations. 

(5)  Those  on  occupations  which  are  to  be  repressed.^     These 


^Laws  of  1913,  Reg.  Sess.,  p.  297.     Laws  of  1913,  Called  Sess.,  p.  33. 

^Laws  of  1907,  p.  356.     Laws  of  1909,  p.  456. 

^Besides  the  taxes  enumerated  below  there  were  at  one  time  a  tax 
of  $500  upon  the  occupation  of  selling  the  Illustrated  Police  News, 
the  Kansas  City  Sunday  Sun,  and  like  publications,  and  a  tax  of  $500 
upon  fights  staged  between  animals.  These  taxes  were  omitted  from 
the  Revised  Civil  Statutes  of  1911,  inasmuch  as  the  Penal  Code,  art. 
509,  prohibits  directly  the  dissemination  of  the'  literature  which  it 
was  sought  indirectly  to  repress  through  taxation,  and  as  art.  1510 
of  the  Penal  Code  prohibits  directly  fights  staged  between  animals. 
For  the  tax  on  the  undesirable  publications  see  Thompson  v.  the  State, 
17  Texas  Crim.  App.,  253  and  the  Report  of  the  Attorney  General, 
1895-1896,  p.    5. 


A  Financial  History  of  Texas  299 

are  a  tax  of  $250  in  each  county  upon  the  peddling  of  cook- 
stoves,  washing  machines,  churns,  wagons  and  other  vehicles,^  a 
tax  of  $500  upon  the  occupation  of  selling  cannon  fire  crackers 
and  toy  cartridge  pistols,-  the  tax  of  $4,000  on  those  soliciting  or 
taking  orders  for  liquor  in  local  option  territory;^  the  tax  of 
$2,000  on  a  "cold  storage";*  the  tax  of  $5,000  upon  an  office  de- 
livering C.  O.  D.  liquor  packages;^  the  tax  of  50  per  cent  upon 
the  gross  receipts  of  pistol  dealers;'^  and  the  tax  of  $2,000  on 
any  retail  dealer  in  non-intoxicating  malt  liquors."^ 

The  only  graduation  attempted  in  the  present  occupation 
taxes  is  for  gas,  water,  and  electric  light  companies;  wholesale 
dealers  in  ice;  cotton  factors;  commission  merchants;  and 
theaters;  in  all  of  which  cases  the  taxes  vary  according  to  the 
population  of  the  town  or  city.^  The  tax  on  peddlers  varies  ac- 
cording as  they  are  on  foot  or  have  one  or  more  horses  or  oxen. 
The  taxes  on  many  of  the  occupations  which  were  relieved  of 
taxation  in  1907  had  been  graduated  according  to  population, 


^Rev.  Civil  Stats.,  1911,  art.  7355,  sec.  12.  Peddlers  of  clocks  and  of 
agricultural  implements  are  subject  to  this  tax. 

-Rev.  Civil  Stats.,  1911,  art.  7356. 

nhid.,  art.  7479. 

nbid.,  art.  1480. 

=Ibid.,  art.  7483. 

"Ibid.,  art.  7380.  Sustained  in  Caswell  &  Smith  v.  the  State,  148 
S.  W.  Rep.,  1159  (1912).  For  a  time  a  popular  method  of  evading  this 
tax  was  to  lease  pistols  for  a;  lump  sum  equal  to  the  price  of  the  pistol. 
This  practice  was  pronounced  an  illegal  and  invalid  evasion  of  the  law. 
See  Report  and  Opinions  of  Attorney  General,  1912-1914,  p.   670. 

■Rev.  Civil  Stats.,  1911,  art.  7476.  A  tax  of  $5,000  imposed  in  1905 
upon  persons  dealing  in  the  unearned  wages  of  another  was  declared 
unconstitutional,  because  of  certain  exemptions;  Owens  v.  the  State, 
53  Texas  Crim.  Rep.,  105  (1908).  The  act  of  1907  levying  a  tax  of 
$2,000  upon  dealers  in  non-intoxicating  malt  liquors  was  held  to  be 
unconstitutional  because  of  the  exemption  of  druggists  and  certain 
other  classes  of  dealers;  Ex-parte  Woods,  52  Texas  Crim.  Rep..  575 
(1908).  But  this  law  was  re-enacted  in  1909,  and  was  upheld  in  Ex- 
parte  Townsend,  64  Texas  Crim.  Rep.,  350.  From  1879  to  1897  a 
tax  of  $1,000  rested  on  nine  and  ten  pin  alleys,  and  from  1889  to 
1897  a  tax  of  $1,000  stood  against  fortune  tellers. 

''Rev.  Civil  Stats.,  1911,  art.  7355. 


300  Bulletin  of  the   University  of  Texas 

while  those  on  merchants  had  been  graduated  according  to  the 
probable  purchases  during  the  year. 

There  has  been  considerable  evasion  of  the  occupation  taxes. 
The  law  contemplates  that  the  county  collector  of  taxes  shall 
demand  the  tax  and  if  the  person  fails  or  refuses  to  pay,  it  be- 
comes the  collector's  duty  to  file  complaint  before  a  justice  of 
the  peace.  It  is  a  misdemeanor,  punishable  by  a  fine  of  from 
$50  to  $500,  for  the  collector  not  to  collect  or  endeavor  to  col- 
lect the  tax.  Laxity,  however,  long  characterized  collections,  and 
collectors  have  been  charged  with  favoring  their  friends.^ 

The  general  occupation  or  license  taxes  have  constituted  next 
to  ad  valorem  taxes  the  source  of  largest  tax  receipts.  Their 
percentage  and  even  absolute  amount  among  receipts  are  on 
the  decline,  however.  Exclusive  of  the  fish  and  oyster  taxes,  they 
made  up  25.6  per  cent  of  total  tax  receipts  in  1881 ;  21  per  cent 
in  1887;  21.8  per  cent  in  1891;  20.2  per  cent  in  1901;  14.9  per 
cent  in  1907;  10.8  per  cent  in  1910,  and  7.1  per  cent  in  1915. 
On  account  of  the  repeal  in  1907  of  a  large  number  of  the  taxes 
and  because  of  the  spread  of  liquor  prohibition,  the  net  receipts 
to  the  state  decreased  from  $1,070,882  in  1907  to  $852,490  in 
1910,  but  there  has  been  an  increase  since  1910.^  The  taxes  on 
liquor  dealers  have  always  been  the  most  remunerative  ones, 
and  next  to  them  since  1907  have  been  those  on  billiard  and  pool 
halls.  Those  on  liquor  dealers  provided  in  1915  85.7  per  cent 
of  the  total  occupation  tax  receipts,  and  those  on  liquor,  billiard 
and  pool  establishments  provided  together  90.4  per  cent  of  such 
receipts.^  The  payment  of  a  general  occupation  tax  does  not 
exempt  the  occupation  from  the  property  tax  or  other  taxes. 


^Report  of  the  State  Revenue  Agent,  1898.  Report  of  the  Special 
Tax  Commission,  1899,  p.  32.  In  1898  out  of  27,169  merchants  in  Texas 
reported  by  Bradstreet,  20,311  paid  an  occupation  tax,  and  in  1900 
out  of  4,000  lawyers  only  2,010  paid  the  license  tax;  Report  of  the 
State  Revenue  Agent,  1898  and  1900.  Circuses  attempted  evasion  of 
the  taxes  on  them  by  calling  themselves  "exhibitions"  and  "shows," 
by  pretending  to  have  a  continuous  performance,  and  by  selling 
tickets  for  49  cents  and  99  cents  instead  of  at  50  cents  and  $1.00, 
but  these  subterfuges  did  not  succeed;  Report  of  Special  Tax  Com- 
mission, 1899,  p.  28;  Report  of  the  State  Revenue  Agent,  1910. 

^See  Appendix,  table  10. 

^Based  upon  table  No.   11  of  the  Report  of  the  Comptroller,   1915. 


Chapter  8. 

CORPORATION  OCCUPATION  TAXES. 

The  development  of  special  taxes  applj^ing  to  corporations  or 
to  businesses  conducted  customarily  under  the  corporate  form 
is  the  most  striking  feature  in  the  history  of  taxation  in  the 
state  since  1880.  In  1880  the  only  taxes  of  this  character  were 
on  life,  fire,  and  marine  insurance  companies;  express  com- 
panies ;  palace,  sleeping  and  dining  car  companies ;  railroad  com- 
panies ;  gas  companies ;  and  the  steamboat  and  stage  coach  busi- 
ness. Receipts  from  all  these  amounted  in  1881  to  only  $30,542, 
which  was  1.2  per  cent  of  the  total  tax  receipts.  At  the  present 
time  every  important  commercial  business,  except  chiefly  the 
mercantile  and  general  manufacturing,  is  subject  to  special  oc- 
cupation taxes  which  in  1910  brought  in  $770,698  or  9.8  per 
cent  of  the  total  tax  receipts  and  in  1915  $1,071,473  which  was 
8  per  cent  of  total  tax  receipts.  The  businesses  selected  for  this 
special  taxation  are  mainly  those  engaged  with  transportation, 
transmission,  and  insurance.  The  development  is  best  shown  by 
taking  up  the  principal  businesses  in  order. 

A.     Bailroads. 

The  1  per  cent  tax  on  the  gross  receipts  from  passenger  travel 
within  the  state  which  was  first  levied  in  1879  was  reduced  to 
one-half  of  1  per  cent  in  1882.  There  Avas  agitation  within  the 
legislature  in  1888  to  increase  the  tax  to  1  per  cent  on  passenger 
and  freight  receipts,  but  the  only  result  was  to  restore  in  1889 
the  tax  on  passenger  receipts  of  1  per  cent.^  The  tax  of  1  per 
cent  on  passenger  earnings  only  was  retained  until  1905.^  The 
act  of  1905  imposed  a  tax  of  1  per  cent  upon  the  gross  receipts 
from  the  passenger,  freight,  and  baggage  business  of  railroads.^ 
In  the  case  of  an  interstate  road  the  tax  to  be  paid  was  to  be 
''equal  to  such  proportion  of  the  said  one  per  centum  of  its 


^Galveston   News,   April    19,   1888. 

^In  1895  a  strong  effort  was  made  to  increase  the  rate  to  two  per  cent, 
but  it  failed;  Houston  Post,  March  6  and  7,  1895. 
'Laws  of  1905,  p.  336. 


302  Bulletin  of  the  University  of  Texas 

gross  receipts  as  the  length  of  the  portion  of  such  line  within  the 
state  bears  to  whole  length  of  such  line, ' '  though  it  was  permitted 
to  the  comptroller  to  substitute  for  this  mileage  rule  any  other 
rule  which  would  be  more  fairly*  representative  of  the  state 's 
share  of  the  total  gross  receipts.  It  was  also  provided  that  any 
road  which  paid  the  tax  on  intangible  assets  should  be  exempt 
from  the  payment  of  the  gross  receipts  tax.  The  employment 
of  this  tax  was  denied  to  counties,  tow^ns,  cities,  and  other  local 
taxing  units.  Though  levied  exclusively  as  a  state  tax  it  was  in 
addition  to  the  state  tax  on  the  real  and  personal  property  of  a 
railroad. 

The  test  suit  which  determined  the  fate  of  the  gross  receipts 
tax  was  filed  by  the  attorney  general  of  Texas  against  the  Gal- 
veston, Harrisburg  and  San  Antonio  Kailway  Company  et  al., 
in  1905,  and  resulted  in  a  judgment  in  the  district  court  in  favor 
of  the  state,  except  as  to  penalties  and  forfeitures.  The  com- 
panies appealed  and  on  March  21,  1906,  a  court  of  civil  appeals 
held  the  statute  unconstitutional.^  Upon  being  carried  to  the 
supreme  court  of  the  state,  that  court  held  the  act  to  be  con- 
stitutional, except  as  to  penalties  and  forfeitures,  which  were 
declared  to  be  excessive.-  The  case  was  removed  to  the  Supreme 
Court  of  the  United  States  in  December,  1906,  and  on  May  18, 
1908,  that  court  reversed  the  decision  of  the  supreme  court  of 
Texas  and  held  the  act  to  be  unconstitutional  as  an  attempt  to 
regulate  interstate  commerce.^ 


^Galveston,  H.  and  S.  A.  Ry.  Co.  v.  Davidson,  93  S.  W.  Rep.,  436 
(1906). 

==100  Tex..  153  (1906). 

^210  U.  S.,  217  (1908).  The  statute  provided  that  railroads  should 
pay  an  annual  tax  "equal  to  one  per  centum"  of  their  gross  receipts, 
and  the  Interpretation  of  the  state  supreme  court  that  this  was 
an  occupation  tax  whose  operation  in;  interstate  commerce  was  in- 
cidental, not  direct,  was  accepted  by  Chief  Justice  Fuller  and  Justices 
Harlan,  ^  White  and  McKenna  of  the  U.  S.  Supreme  Court  who  dis- 
sented from  the  majority  decision.  The  distinction  between  the  Texas 
tax  and  the  Maine  tax,  which  was  sustained  in  142  U.  S.,  217,  seems 
to  be  that  the  Maine  tax  was  in  the  nature  of  a  "commutation"  tax 
in  lieu  of  all  other  taxes  upon  the  roadbed  of  the  railroad,  while  the 
Texas  tax  was  in  addition  to  all  other  taxes;  State  and  Local  Taxa- 
tion, 1911,  pp.  188-192. 


A  Financial  History  of  Texas  303 

Railroads  are  taxed  at  present  only  by  the  property  tax  on 
their  real  and  personal  property,  including  intangible.  Tliey 
are  exempt  from  payment  of  the  franchise  tax.^ 

B.     Sleeping,  Palace,  and  Dining  Car  Companies. 

In  1880  these  companies  were  subject  to  an  ad  valorem  tax 
of  one-half  of  one  per  cent  upon  the  value  of  their  property  in 
the  state.  In  1881  it  was  provided  that  "from  every  person, 
firm  or  association  of  persons  owning  or  running  any  palace, 
sleeping,  or  dining-room  cars  not  owned  by  the  railway  com- 
pany, on  any  railroad  in  this  state,  there  shall  be  collected 
an  annual  tax  of  $2  per  mile  for  each  and  every  mile  of  any 
and  all  railroads  in  this  state  over  which  such  cars  may  run." 
This  tax  was  to  be  in  lieu  of  all  other  taxes,  and  could  not  be 
employed  by  any  county  or  municipality.  Upon  being  tested 
in  the  courts,  it  was  declared  unconstitutional,  because  it  did 
not  apply  to  all  persons  owning  and  running  such  cars.-  In 
1882  this  defect  in  the  law  was  cured  and  the  tax  was  reduced 
to  50  cents.  The  tax  was  paid  by  the  Pullman  Company,  up 
to  August  31,  1884,  but  from  then  until  August  31,  1886,  none 
was  paid  and  from  1886  to  1894  only  $83  was  paid  annually 
and  that  by  the  H.  &  T.  C.  Railroad  on  one  car  between  Austin 
and  Houston.  The  companies  declined  to  pay  the  tax  on  the 
ground  that  it  was  an  interference  with  interstate  commerce, 
and  no  action  was  taken  by  the  state  to  test  it.  In  1893  a  tax 
of  25  cents  on  each  $100  of  the  capital  stock  of  such  companies 
employed  within  the  state  was  enacted.^  The  method  of  com- 
puting the  state's  share  of  the  capital  stock  as  laid  down  in 
the  statute  was  that  it  should  be  "such  proportion  of  the 
capital  of  such  company,  after  deducting  therefrom  the  amount 
shown  to  be  invested  in  real  estate,  manufacturing  plants, 
materials  and  properties,  other  than  such  sleeping,  palace,  or 
dining  cars  and  their  equipment  or  properties  used  in  con- 
nection with  the  operation  of  such  cars,  as  the  miles  over  which 
it  runs  its  cars  in  this  state  bear  to  the  whole  number  of  miles 


^Rev.  Civil  Stats.,  1911,  art.  7403. 

^The  Pullman  P.  C.  Co.  v.  State  of  Texas,  64  Tex.,  274  (1885), 

^Laws  of  1893,  p.  156.     Rev.  Civil  Stats.,  1911,  art.  7375. 


304  Bulletin  of  the  University  of  Texas 

in  this  state  and  other  states  over  which  such  cars  may  run." 
This  tax  was  in  addition  to  other  taxes  in  force,  but  no  occu- 
pation tax  could  be  levied  upon  such  companies  by  any  county, 
city,  or  town.  Upon  data  furnished  by  the  companies  to  the 
comptroller,  the  latter  computes  the  tax.  This  tax  has  been 
paid  regularly  by  the  Pullman  Company.  In  1897  a  tax  of  10 
cents  for  each  100  miles  over  which  cars  ran  within  the  state 
was  enacted  to  replace  the  one  of  50  cents  per  mile,  but  two 
weeks  after  enactment  it  was  repealed  and  succeeded  by  a  tax 
of  2y2%  on  the  gross  receipts  from  passenger  travel  originating 
and  ending  within  the  state.  This  tax  was  payable  quarterly 
to  the  state  treasurer.  This  gross  receipts  tax  was  in  addition 
to  the  one  of  25  cents  on  the  capital  stock.  It  was  denied  to 
a  county,  city,  or  town  to  levy  an  occupation  tax  upon  a  com- 
pany doing  this  business.^  In  1905  the  rate  was  raised  to  4% 
on  gross  receipts,  except  those  from  buffet  service,  and  in  1907 
to  5%.  In  1910  the  proceeds  of  the  gross  receipts  tax  were 
$33,845;  those  of  the  capital  stock  tax,  $2,908.  In  1915  the 
projceeds  w^ere,  respectively,  $39,628  and  $5,157. 

C.     Express  Companies. 

In  1880  an  express  company  was  subject  to  a  fixed  annual 
occupation  tax  of  $750,  but  $250  of  this  amount  was  appor- 
tioned by  the  comptroller  among  the  counties  according  to  the 
business  done  in  each,  and  there  could  be  no  other  county  or 
municipal  occupation  taxes  upon  such  companies.  In  1881  the 
full  $750  was  made  to  accrue  to  the  state,  and  it  was  still  not 
permitted  to  counties  and  municipalities  to  levy  an  occupation 
tax  on  the  express  business.  The  fixed  annual  tax  was  de- 
creased to  $500  in  1882,  but  was  raised  to  $1,000  in  1889.  In 
1895  it  was  replaced  by  a  tax  of  114%  on  gross  receipts.-  In 
1905  the  rate  was  increased  to  2i/2%-  Express  companies  are 
also  subject  to  the  property  tax  and  to  the  franchise  tax.  In 
1910  the  gross  receipts  tax  amounted  to  $64,620;  in  1915, 
$73,081. 


^Laws  of  1897,  Reg.  Sess..  p.  168.     Rev.  Civil  Stats.,  1911,  art.  7390. 

-The  Mills  Bill  proposed  a  tax  of  2  per  cent,  but  the  senate  finance 
committee  recommended  one  of  1*  per  cent;  Houston  Post,  January 
27,  February  1,  March  6  and  7,  1895. 


A  Financial  History  of  Texas  305 

D.  Telegraph  Companies. 

In  1880  the  occupation  tax  on  a  telegraph  company  v^as  one 
cent  for  each  full  rate  message  and  one-half  cent  for  each 
message  less  than  full  rate.  Railroad  messages  in  operating 
trains  and  company  messages  were  exempt.  County  and  mu- 
nicipal occupation  taxes  on  the  companies  were  not  permitted. 
This  tax  was  contested  and  was  declared  unconstitutional  be- 
cause it  taxed  interstate  messages.^  In  1882  the  same  rates 
were  made  to  apply  only  to  intrastate  messages.  This  remained 
the  occupation  tax  on  the  companies  until  1905,  when  it  was 
succeeded  by  a  tax  of  3%  on  the  gross  receipts  from  all  sources 
within  the  state.  In  1907  the  rate  was  reduced  to  2%%.  Tele- 
graph companies  are  subject  also  to  the  property  tax  and  to 
the  franchise  tax,  except  when  operating  under  a  Federal  fran- 
chise. In  1910  the  gross  receipts  tax  amounted  to  $14,659; 
in  1915,  $24,272. 

E.  Telephone  Compujiies. 

The  first  occupation  tax  imposed  by  Texas  on  telephone 
companies  Avas  in  1882,  and  w^as  a  state  tax  of  $50  and  a 
county  tax  of  $10.  The  state  tax  was,  unlike  the  other  corpo- 
ration occupation  taxes,  collected  by  the  county  collector.  In 
1892  the  receipts  from  it  w^ere  $200.  In  1893  a  state  tax  of 
25  cents  on  each  telephone  in  use  replaced  the  fixed  tax,  and 
it  was  denied  to  counties  and  municipalities  to  levy  any  occu- 
pation tax  on  the  business.  This  state  tax  was  payable  to  the 
state  treasurer,  and  it  produced  in  1894  $1,158.  This  remained 
the  method  of  taxation  until  1905,  when  a  tax  of  21/2%  on  gross 
receipts  was  enacted.  In  1907  the  rate  was  reduced  to  1%%, 
payable  quarterly  to  the  state  treasurer.-  Telephone  companies 
are  subject  to  the  property  tax  and  the  franchise  tax,  but  to 
no  county  or  municipal  occupation  taxation.  In  1910  the  gross 
receipts  tax  produced  $81,350 ;  in  1915,  $150,728. 


^W.  U.  Tel.  Co.  V.  State  of  Texas,  105  U.   S.,  460    (1881).     See  also 
55  Tex.,  314    (1881),  and  62  Tex.,  630    (1884). 
*Rev.  Civil  Stats..  1911,  art.  7382. 


20— H 


306  Bulletin  of  the  University  of  Texas 

F.  Steamboats  and  Stage  Coaches. 

In  1880  there  was  a  tax  of  1%  on  the  gross  passenger  receipts 
of  steamboats  and  stage  coaches.  In  1882  it  was  reduced  to 
three-fourths  of  1%,  but  was  increased  to  1%  in  1889.  The 
stage  coach  tax  disappeared  in  1897,  and  that  on  steamboats 
in  1898.    The  taxes  produced  insignificant  receipts. 

G.  Street  Railways. 

The  first  occupation  tax  laid  by  Texas  upon  street  railways 
was  in  1897  and  was  one  of  $2  per  mile  of  track  owmed.  It  w^as 
collected  by  the  county  collector  and  total  receipts  were  $567 
in  1906.  In  1907  it  was  enacted  that  street  railways  in  or  con- 
necting cities  of  from  10,000  to  20,000  inhabitants  should  pay 
a  tax  of  one-half  of  1%  on  their  gross  receipts,  and  those  in 
cities  of  more  than  20,000  inhabitants  three-fourths  of  1%.^ 
This  is  in  addition  to  the  tax  of  1897.  Street  railways  and 
interurbans  are  not  subject  to  the  franchise  tax,  and  there  is 
no  county  or  municipal  occupation  taxation  permitted.-  It  is 
payable  quarterly  to  the  state  treasurer.  In  1910  it  amounted 
to  $39,197;  in  1915,  $62,590. 

H.     Gas,  WateVf  and  Electric  Companies. 

Only  gas  companies  w^ere  subject  to  an  occupation  tax  in 
1880.  It  was  one  of  $50  and  applied  only  to  plants  in  cities 
of  10,000  or  more  inhabitants.  It  w^as  collected  by  county 
collectors,  and  its  use  was  permitted  to  counties,  towms,  and 
cities.  In  1881  the  tax  was  made  to  apply  in  all  towns  and 
cities  irrespective  of  population ;  but  in  1882  the  tax  for  plants 
in  cities  of  10,000  or  more  was  made  $35,  in  cities  under  10.000, 
$20.  These  remained  the  rates  and  method  of  taxation  until 
1905.  In  1889  electric  light  plants,  and  in  1897  water  plants 
became  taxable  after  the  manner  and  to  the  amount  that  gas 
plants  were.  In  1904  the  total  tax  paid  by  all  was  $4,665. 
In  1905  a  tax  of  one-fourth  of  1%  on  the  gross  receipts  was 
enacted  to  apply  to  all.  Counties  and  municipalities  are  not 
permitted  to  employ  the  tax.     In  1907  the  rate  was  changed 


*Rev.  Civil  Stats.,  1911.  arts.  7378  and  7355,  sec.  34. 
'Dallas  Con.  Elec.  St.  Ry.  Co.  v.  State,  102  Tex.,  570  (1909). 


A  Financial  History  of  Texas  307 

to  one-fourth  of  1%  in  cities  with  a  population  of  from  10,000 
to  25,000,  and  one-half  of  1%  in  cities  having  a  population  of 
25,000  and  over.^  The  tax  is  in  addition  to  all  other  taxes,  and 
companies  are  subject  to  the  property  tax  and  the  franchise 
tax.  In  1910  the  gross  receipts  tax  paid  amounted  to  $22,924; 
in  1915  it  was  $44,007. 

/.     Insurance  Companies. 

(a.)  Life.  In  1880  life  insurance  companies  were  subject 
to  a  state  occupation  tax  of  $300,  payable  annually  to  the 
comptroller,  and  to  a  county  tax  of  $10.  The  county  tax  was 
reduced  to  $7  in  1882,  but  was  increased  to  $10  in  1889.  In 
1893  a  tax  of  1^/4%  on  gross  premium  receipts  within  the  state 
was  enacted.  It  was  made  payable  to  the  state  treasurer,  and 
the  levy  of  an  occupation  tax  on  companies  was  denied  to  any 
county,  city,  or  town.-  In  1895  a  strong  effort  was  made  to 
increase  the  tax,  but  the  result  was  to  impose  an  occupation 
tax  of  $50  on  general  agents  and  one  of  $7  on  local  agents  of 
the  life  companies,  and  one  of  $2  on  agents  of  industrial  life 
companies."^  In  1897  the  gross  receipts  tax  was  increased  to 
2%,  and  the  tax  on  local  agents  was  reduced  to  $5.*  In  1905 
there  w^ere  two  enactments,  but  the  later  and  prevailing  one 
levied  a  tax  of  2i/4%  on  gross  premium  receipts,  and  provided 
for  a  reduction  to  I/2  of  1%  and  14  of  1%  should  the  companies 
invest  as  much  as  one-quarter  and  one-half  of  their  entire  assets 
in  Texas  real  estate  or  Texas  securities.^  Fraternal  insurance 
orders  were  exempt.  The  ''Robertson  Law"  of  April  24,  1907, 
required  companies  doing  a  life  insurance  business  in  Texas 
to  invest  and  keep  invested  in  Texas  real  estate  and  Texas 
securities  not  less  than  75%  of  their  legal  reserve  on  account 
of  policies  written  on  the  lives  of  citizens  of  Texas.     In  1907 


^Rev.  Civil  Stats.,  1911,  art.  7355,  sees.  25,  26,  27. 

-The  feeling  about  this  tax  as  expressed  by  the  Austin  correspondent 
of  the  Galveston  News  in  the  issue  of  February  18,  1893  was  that  "it 
salts    the   life    companies,    and    they    have    few   enthusiastic    friends." 

'Houston  Post,  March  14,  15,  and  21,  1895. 

*The  increased  rate  was  urged  by  the  governor;  Houston  Post,  March 
24,   1897. 

'Laws  of  1905,  p.  373. 


308  Bulletin  of  the  University  of  Texas 

the  gross  receipts  tax  was  increased  to  3%,  but  any  company 
complying  with  the  Robertson  Law  was  subject  to  a  tax  of 
only  1%;  also  if  any  company  should  invest  as  much  as  25% 
of  its  entire  assets  in  Texas  securities  or  Texas  real  estate,  the 
tax  became  1%,  and  if  it  should  invest  as  much  as  50%,  the 
rate  became  %  of  1%  on  its  gross  premium  receipts.^  Fraternal 
orders  were  exempt.  Companies  which  failed  to  subscribe  to 
the  law  became  subject  to  a  penalty  of  $5,000  and  double  the 
amount  of  the  tax  for  each  year  delinquent.  This  tax  was  in 
lieu  of  all  other  occupation  taxes.  In  1907  were  repealed  the 
occupation  taxes  on  local  and  general  agents  of  insurance 
companies,  except  industrial  life.  In  1909  a  distinction  was 
made  in  the  methods  of  taxing  domestic  and  foreign  life  com- 
panies. Domestic  life  companies,  or  those  incorporated  by  this 
state,  were  relieved  of  an  occupation  tax  and  became  taxable 
only  by  the  property  tax,  the  base  of  the  tax  being  the  value 
of  their  real  estate  and  personal  property  less  reserve.^  Foreign 
insurance  companies  remained  subject  to  the  tax  of  3%  upon 
gross  premium  receipts,  and  it  was  provided  that  if  as  much 
as  30%  of  the  total  Texas  reserves  should  be  invested  in  Texas 
real  estate  securities,  the  tax  should  be  2.6%  ;  if  as  much  as 
60%,  2.3% ;  if  as  much  as  75%,  2%.  The  requirement  that  at 
least  75%  of  the  Texas  reserves  should  be  invested  in  Texas 
real  estate  or  Texas  securities  remained  unchanged.^  This  re- 
quirement, which  was  first  made  in  1907,  led  to  the  withdrawal 
from  the  state  of  the  leading  old  line  companies,  and  the  merits 
of  the  requirement  have  been  hotly  debated.* 

(b.)  OfJier  Insurance  Companies.  Fire  and  marine  insur- 
ance companies  were  subject  until  1882  to  a  state  annual  occupa- 
tion tax  of  $200  and  toi  a  county  tax  of  $10.     In  1882  guaranty, 


^Laws  of  1907,  p.  482.  Metropolitan  Life  Ins.  Co.  v.  T.  B.  Love, 
101  Tex..  444  (1908).  Report  of  the  Attorney  General,  1906-8,  p.  44. 
Kansas  City  Life  Ins.  Co.  v.  Love,  101  Tex.,  531  (1908)  refers  to  a  tem- 
porary exemption  to  companies  which  had  to  deposit  in  their  home 
state  securities  covering  their  entire  reserve. 

=Laws  of  1909,  p.  192.     Rev.  Civil  Stats.,  1911,  arts.  4764,  4825. 

^Laws  of  1909,  p.  264.     Rev.  Civil  Stats.,  1911,  art.  4779. 

^Message  of  Governor  Ferguson,  April  29,  1915;  House  Journal,  34th 
Leg.,  First  Called  Sess.,  p.  7. 


A  Fi)ui}winl  History  of  Texas  309 

accident,  health,  and  livestock  insurance  companies  were  added 
to  the  taxable  list,  and  the  state  tax  was  made  the  same  as  that 
on  fire  and  marine  companies,  though  the  county  tax  was  made 
$7  for  all  companies,  including  fire  and  marine. 

These  rates  remained  unchanged  until  1893,  when  a  tax  of  one- 
half  of  1%  upon  gross  premium  receipts  within  the  state  was 
enacted  to  apply  to  all  insurance  companies.  In  1895  occupation 
taxes  of  $50  on  general  agents  and  $7  on  local  agents  were  en- 
acted. In  1897  the  rate  on  fire  insurance  companies  was  left  at 
one-half  of  1%,  while  that  on  others  was  increased  to  1%.  In 
1905  the  tax  on  the  gross  receipts  of  surety  and  guaranty  com- 
panies was  increased  to  2% ;  on  the  gross  receipts  of  fire  and 
other  insurance  companies,  1%%.^  The  rate  applicable  to  these 
insurance  companies  was  subject  to  reduction  as  in  the  case  of 
the  life  companies,  according  to  the  proportion  of  assets  invested 
in  Texas  real  estate  and  securities.  The  legislation  of  1907  which 
required  at  least  75%  of  the  reserve  on  Texas  policies  to  be  in- 
vested in  Texas  was  applicable  only  to  life  companies.  In  1907, 
however,  the  gross  receipts  tax  on  all  companies  other  than  life 
was  increased  to  a  flat  rate  of  2%.  In  1911  it  was  increased  to 
2  6/10%,  subject  to  reduction  to  1%  if  the  company  invested  as 
much  Bs  one-fourth  of  its  entire  assets  in  Texas  real  estate  or 
other  legal  investments,  and  to  one-half  of  V/(  if  as  much  as  one- 
half  of  the  entire  assets  should  be  invested.'-  Purely  co-operative 
or  mutual  fire  insurance  companies  were  not  made  taxal)le,  and 
no  distinction  was  made  between  domestic  and  foreign  companies, 
as  was  made  in  the  case  of  life  companies.  In  1909  a  Fire 
Rating  Board  was  established  with  the  power  to  regulate  the 
rates  of  fire  insurance.  It  was  provided  that  the  expenses  of 
the  board  should  be,  assessed  upon  the  companies  in  the  propor- 
tion which  the  gross  premium  receipts  of  each  bore  to  the  aggre- 
gate of  premium  receipts.  Though  the  assessment  is  called  a 
tax,  it  is  not  technically  a  tax."^ 

The  taxes  on  insurimce  companies  have  always  been  the  most 
productive  of  all  the  special  occupation  taxes,  except  the  gross 


^Fire  Assn.  of  Phila.  v.  Love.  101  Tex.,  376   (1908). 

^General  Laws,  1911,  p.  216. 

^'See  Firemen's  Fund  Ins.  Co.  v.  Von  Rosenberg,  103  Tex.,  571  (1910), 


310  Bulletin  of  the  University  of  Texas 

passenger  earnings  tax  in  its  early  days.  In  1881  insurance 
companies  paid  $13,466  or  44  per  cent  of  the  total  received  by  the 
state  from  special  occupation  taxes ;  in  1891,  $33,716,  or  34.6  per 
cent;  in  1895,  $63,783,  or  47.6  per  cent;  in  1900,  $115,455,  or  56.4 
per  cent;  in  1905,  $204,422,  or  53.gi  per  cent;  in  1910,  $364,825, 
or  47.3  per  cent ;  in  1915,  $486,371,  or  45.3  per  cent. 

J.     Other  Occupations. 

Credit  agencies  were  first  taxed  by  Texas  in  1889.  and  the  tax 
was  $250  annually,  but  no  county  or  city  taxation  of  them  was 
permitted.  This  was  increased  to  $300  in  1897  and  remained  at 
that  amount  until  1905. 

In  1905-7  the  occupations  which  became  subject  to  the  gross 
receipts  method  of  taxation  were,  with  the  rate  of  the  tax,  as 
follows:  collecting  or  commercial  agencies  and  commercial  re- 
porting credit  agencies,  %  of  1% ;  car  companies,  3%  ;  dealers  in 
futures,  lVi%;  oil  producers,  i/o  of  1%;^  pipe  line  companies, 
2%  f  pistol  dealers,  50%  f  publishers  of  school  text  books  and  law 
books,  1%;  terminal  companies,  1%;  wholesale  dealers  in  oil 
refined  from  petroleum,  2%  ;*  wholesale  liquor  dealers,  %  of  1%:^ 
As  dealing  in  futures  was  prohibited  in  1907  the  tax  on  such 
dealers  disappeared  in  1907.®  Wholesale  liquor  dealers,  pistol 
dealers  and  terminal  componies  were  first  taxed  in  1907.*^ 


^The  Texas  Co.  v.  Stephens,  100  Tex.,  628  (1907). 

^^Ibid. 

^Eppstein  v.  State,  138  S.  W.  Rep.,  1124.  Caswell  &  Smith  v.  State, 
148  S.  W.  Rep.,  1159. 

'The  Texas  Co.  v.  Stephens,  100  Tex.,  628.  Southwestern  Oil  Co.  v. 
State  of  Texas,  100  Tex.,  647,  and  217  U.  S.,  114  (1910).  Report  of 
Attorney  General,   1904-6,   pp.   32-33;    1906-8,   pp.  34-35;    1908-10,  p.   41. 

''For  amendatory  act  see  Laws  of  1913,  Reg.  Sess.,  p.  33. 

«Laws  of  1907,  p.  172. 

^For  the  taxes  based  on  gross  receipts  see  Rev.  Civil  Stats.,  1911, 
arts.   7369-7392. 


Chapter  9. 

corporation  franchise  taxes. 

Prior  to  1893  there  was  no  special  taxation  of  franchises,  but 
they  were  subject  to  taxation  as  property  under  the  property 
tax.  Governor  Hogg  suggested  in  1891  an  annual  franchise  tax, 
but  it  was  not  until  1893  that  one  was  enacted.^  It  was  then 
provided  that  each  domestic  corporation  and  every  foreign  cor- 
poration doing  business  in  Texas  should  as  a  condition  precedent 
to  doing  business  pay  an  or  before  May  1  to  the  secretary  of 
state  an  annual  franchise  tax  of  $10.  Corporations  organized 
for  the  purpose  of  religious  worship,  or  for  holding  burial  places 
not  for  private  profit,  or  for  school  purposes,  or  for  purely  public 
charity  were  exempt.  In  1897  graduation  of  the  tax  on  domestic 
corporations  from  $10  to  $50  according  to  the  amount  of  capital 
stock  was  introduced.-  Different  graduation  and  higher  rates 
were  applied  to  foreign  corporations,  and  there  was  no  maximum 
payment  fixed  for  them  as  was  done  for  domestic  corporations. 
Railroad  corporations  paying  the  gross  passenger  earnings  tax, 
and  corporations  organized  for  the  purpose  of  holding  agricultural 
fairs  and  encouraging  agricultural  pursuits  were  added  to  the 
list  of  exempt  corporations.  Greater  refinements  of  graduationi 
which  resulted  in  an  increase  in  the  tax  were  made  in  1905,  and 
it  was  also  provided  then  that  the  tax  should  be  computed  upon 
the  basis  of  the  authorized  capital  stock,  unless  the  aggregate 
amount  of  the  capital  stock  issued  plus  the  surplus  and  undivided 
profits  exceeded  the  authorized  capital  stock,  in  which  case  the 


^Messages  of  Governor  Hogg,  January  21,  1891  and  January  12,  1893. 
Laws  of  1893,  p.  156. 

"Laws  of  1897,  Reg.  Sess.,  pp.  140,  168.  Report  of  Secretary  of 
State,  1898,  p.  4,  and  1904,  p.  5.  Report  of  the  Attorney  General,  1898, 
p.  11;  1900,  p.  12.  Arkansas  Building  and  Loan  Asso.  v.  J.  W.  Madden, 
91  Tex.,   461    (1898). 


312  Bulletin  of  the  University  of  Texas 

larger  amount  should  be   the  basis. ^     In   1907   the  rates  were 
changed  and  increased." 

The  rates  on  domestic  corporations  enacted  in  1907  which  are 
still  in  effect  are  50  cents  on  each  $1,000  of  authorized  capital 
stock  up  to  and  including  $1,000,000,  and  25  cents  on  each  $1,000 
of  stock  in  excess  of  $1,000,000.  Should  the  total  amount  of 
capital  stock  issued  and  outstanding  plus  the  surplus  and  un- 
divided profits  exceed  the  authorized  capital  stock,  the  tax  is  50 
cents  on  each  $1,000  of  stock,  surplus,  and  undivided  profits.  The 
minimum  tax  on  domestic  corporations  is  $10.  The  rates  on 
foreign  corporations  are  $1  on  each  $1,000  of  authorized  capital 
stock  up  to  and  including  $100,000;  $2  on  each  $5,000  of  stock 
over  $100,000  and  up  to  and  including  $1,000,000;  $2  on  each 
$20,000  of  stock  over  $1,000,000  and  up  to  and  including  $10,- 
000,000 ;  and  $2  on  each  $50,000  of  stock  in  excess  of  $10,000,000. 
Should  the  capital  stock  issued  and  outstanding  plus  the  surplus 
and  undivided  profits  exceed  the  authorized  capital  stock,  the 
rates  on  the  combined  amount  remain  the  same  as  above  except 
that  $2  is  levied  on  each  $1,000  up  to  and  including  $100,000. 
The  minimum  tax  on  a  foreign  corporation  was  fixed  at  $25.  In 
addition  to  corporations  organized  for  religious  worship,  for 
providing  places  of  burial  not  for  private  profit,  for  the  purpose 
of  holding  agricultural  fairs  and  encouraging  agricultural  pur- 
suits, or  for  purely  public  charity,  there  are  exemptions  of  cor- 
porations which  have  no  capital  stock  and  which  are  organized 
for  the  exclusive  purpose  of  promoting  the  public  interest  of  any 
city  or  town.  Insurance  companies,  surety,  guaranty,  fidelity 
companies,  transportation  companies,  and  sleeping,  palace  and 
dining  car  companies  which  pay  the  gross  receipts  taxes  are  ex- 
empt from  the  franchise  tax.     Fraternal  organizations  also  are 


^Laws  of  1905,  pp.  21,  100.  Gaar  Scott  and  Co.  v.  O.  K.  Shannon, 
52  Tex.  Civ.  App.,  634  (1909);  223  U.  S.,  468  (1911).  Report  of  the 
Attorney  General,  1904-6,  p.  34;  1906-8,  p.  35;  1908-10,  p.  42.  The  Scott 
case  does  not  involve  the  question  of  the  right  of  Texas  to  levy  a 
franchise  tax  upon  a  corporation  engaged  in  interstate  commerce  but 
merely  the  right  of  a  company  engaged  only  in  interstate  commerce  to 
recover  the  tax  when  it  had  been  voluntarily  paid. 

^'Laws  of  1907,  p.  502.  See  also  Laws  of  1911,  Reg.  Sess.,  p.  91. 
Rev.  Civil  Stats.,  1911,  arts.  7393-7406. 


A  Financial  History  of  Texas  313 

exempt.  To  these  exemptions  specifically  made  in  the  act  should 
be  added  those  corporations  which  operate  under  Federal  fran- 
chises, such  as  national  banks.  The  Western  Union  Telegraph 
Company  was  judicially  declared  exempt,  because  the  tax  would 
constitute  a  burden  on  interstate  commerce.^ 

The  future  of  the  franchise  tax  is  seriously  threatened  in  a 
case  in  which  there  is  contested  the  right  of  the  state  to  tax  a 
foreign  corporation  on  the  basis  of  all  of  its  capital  stock  instead 
of  on  such  amount  only  as  is  employed  within  the  state.  A  Fed- 
eral district  court  granted  a  preliminary  injunction  restraining 
the  collection  of  the  tax  on  the  ground  that ' '  an  imposition  which 
is  based,  whether  in  whole  or  in  substantial  part,  on  the  value 
of  the  property  outside  of  the  state,  or  on  interstate  or  foreign 
commerce  engaged  in,  so  that  the  amount  of  it  grows  in  exact 
proportion  to  the  growth  of  such  property  or  commerce,  is  a 
burden  on  such  property  or  commerce."^ 

In  1915  the  receipts  from  domestic  franchises  were  $401,367, 
and  those  from  foreign  franchises  were  $112,618. 

Summary  of  Corpoffition  Taxation. 

The  history  of  special  corporation  taxation  in  Texas  reveals 
that  until  1893  only  railroads,  steamboats,  and  stage  coaches  were 
taxed  by  the  gross  receipts  method,  while  other  corporations  were 
taxed  lightly  by  fixed  annual  payments.  The  period  1893-1897 
was  one  of  deep  commercial  and  financial  depression.  The  popu- 
list party,  which  was  strong  and  aggressive,  advocated  the  heavier 
taxation  of  corporations,  and  the  feeling  was  general  that  the 
taxation  of  insurance,  express,  and  sleeping  car  companies  was 
extraordinarily  light.  Governors  Hogg  and  Culberson  favored 
an  increase  of  corporate  taxation,  and  the  result  was  the  extension 
of  the  gross  receipts  method  and  the  introduction  of  franchise 


^Western  U.  Tel.  Co.  v.  The  State,  103  Tex.,  306  (1910).  A  company 
shipping  its  manufactured  goods  into  the  state,  whether  sold  before 
or  after  arrival  in  the  state,  is  engaged  in  interstate  commerce, 
and  needs  no  permit  to  do  business  in  the  state;  Miller  v.  Goodman, 
M  Tex.,  41  (1897).  A  foreign  manufacturing  corporation  whose  prod- 
ucts are  sold  merely  on  commission  by  local  merchants  is  engaged  in 
interstate  commerce  and  does  not  need  to  secure  a  permit  to  do 
business  in  the  state;  Allen  v.  Tyson-Jones  Buggy  Co.,  91  Tex..  22  (1897). 

^Crane   Co.   v.   Looney,    218   Fed.    Rep.,    260    (1914). 


314  Bulletin  of  the  University  of  Texas 

taxation/  A  period  of  quiet  followed  until  1905-1907,  when  the 
gross  receipts  method  was  further  extended  and  the  rates  carried 
by  it  as  well  as  those  of  the  franchise  tax  were  increased.  The 
extension  and  increases  in  these  taxes  which  occurred  in  1895-7 
and  1905-7  were  coincident  with  a  condition  of  deficiency  in  the 
general  revenues. 

The  financial  significance  of  special  occupation  taxes  has  stead- 
ily grown.  Their  amount  and  per  cent  of  total  tax  receipts  at 
selected  dates  were  r 

Date.  Amount.                                   Per  cent. 

1881 $       30,542. 1.2 

1887 40,338 1.2 

1891 97,406 2.5 

1901 231,854 4.6 

1910 770,698 9.8 

1915 1,071,473 , 7.9 

The  constitution  directs  that  not  less  than  one-fourth  of  the 
proceeds  of  the  special  occupation  taxes  shall  accrue  to  the  avail- 
able school  fund  for  the  benefit  of  the  public  free  schools.^  One- 
fourth  is  the  share  customarily  set  aside.*  The  ease  of  adminis- 
tration of  this  method  of  taxation  commends  it,  though  consid- 
erable unfairness  may  result  unless  the  various  rates  are  care- 
fully devised  so  as  to  impose  equal  taxation.^  The  financial 
significance  of  the  franchise  tax  also  has  increased.  The  amount 
and  per  cent  of  total  taxes  at  selected  dates  were  :^ 


^Message  of  Governor  Hogg,  January  12,  1893.  Galveston  News, 
January  13,  1893.  Houston  Post,  February  27,  and  March  6,  7  and  15, 
1895,  and  March  24,  1897.  Messages  of  Governor  Culberson,  April  29 
and  March  5,  1895,  and  June  18,  1897. 

^See  Appendix,  table  10.  The  percentages  are  slightly  greater  than 
here  stated,  because  ad  valorem,  poll,  and  general  occupation  taxes 
are  given  in  gross,  not  net,  amounts. 

^Art.  VII,  sec.  3. 

*Rev.  Civil  Stats.,  1911,  art.  2725. 

"^Evasion  of  the  tax  was  charged  in  1908;  Report  of  the  State  Tax 
Commissioner,  1908,  p.  16. 

^See  Appendix,  table  10.  The  percentages  which  franchise  taxes  are 
of  total  tax  receipts  are,  as  in  the  case  of  the  special  occupation  taxes, 
greater  than  here  given,  because  the  ad  valorem,  poll,  and  general 
occupation  tax  amounts  are  gross  amounts,  while  the  special  occupation 
and  franchise  tax  amounts  are  net  amounts. 


A  Financial  History  of  Texas  315 

Date.  Amount.  Per  cent. 

1894 $       23,350. 0.6 

1910 449,667 5.7 

1915 513,986. ., 3.8 

The  franchise  tax  is  a  state  tax;  exclusively  and  the  proceeds 
accrue  wholly  to  the  general  revenue  account. 

There  has  been  an  important  growth  not  only  in  the  revenue 
derived  from  corporations  by  means  of  occupation  and  franchise 
taxes,  but  also  in  the  receipts  from  corporation  fees  and  from 
the  property  tax.  The  proportion  which  receipts  from  corpora- 
tions are  of  total  state  revenue  can  not  be  exactly  stated,  but  as 
well  as  can  be  ascertained,  the  proportion  was  3.6  per  cent  in 
1882,  8.5  per  cent  in  1895,  and  21.5  per  cent  in  1915.^  The  per- 
centage which  corporation  taxes  were  of  all  tax  receipts  was  4.7 
in  1882,  10.5  in  1895,  and  24.6  in  1915.  Does  this  growth  repre- 
sent a  tendency  to  put  the  weight  of  taxation  on  corporations,  or 
does  it  represent  the  growing  importance  of  the  corporation  as  a 
form  of  business  organization?  The  answer  probably  lies  be- 
tween. On  account  of  the  special  taxes  applying  to  corporations, 
it  is  likely  true  that  they  are  more  nearly  taxed  in  accordance 
with  their  ability  to  pay  than  are  individuals. 


^No  assessments  of  banks  or  bank  stock  are  given  in  the  comp- 
troller's reports  for  1882  and  1895,  so  taxes  on  them  can  not  be  in- 
cluded among  corporate  taxes.  They  are  included  in  the  statement  for 
1915,  but  if  they  are  excluded,  the  percentage  is  19.7  instead  of  21.5. 
The  United  States  Bureau  of  Corporations  found  that  in  1912  the 
proportion  of  corporate  receipts  to  total  receipts  in  Texas  was  20.3 
per  cent;  Report  of  the  Commissioner  of  Corporations  on  the  Taxation 
of  Corporations  in  the  Southern  and  Southwestern  States,  pp.  313-314 
(1915).  See  also  the  Report  of  the  Texas  Welfare  Commission,  1912, 
p.  46  et  seq. 


Chapter  10. 
the  poll  tax; 

In  1881  the  poll  tax  levied  by  the  state  was  $2,  $1  of  which 
was  for  general  revenue  purposes  and  $1  for  the  benefit  of  the 
public  free  schools.  Counties  and  cities  were  each  permitted  to 
levy  a  tax  of  $1.  The  total  poll  tax  which  might  be  levied  was 
$4.  In  1882  the  state  tax  was  fixed  at  $1.50,  $1  of  which  was 
for  the  public  free  schools  and  50  cents  for  general  revenue 
purposes.  The  tax  which  counties  might  levy  was  fixed  at  25 
cents.^  It  is  not  permitted  to  towns  to  levy  a  poll  tax,  but  that 
which  cities  can  levy  is  $1.-  These  rates  have  not  changed 
since  1882. 

The  state  and  county  tax  is  payable  between  October  1  and 
February  1  by  every  male  person  between  the  ages  of  21  and  60 
who  has  resided  in  the  state  on  the  fii'st  day  of  January  preced- 
ing its  levy.  Those  exempted  from  its  payment  other  than  by 
reason  of  age  and  sex  are  Indians,  persons  insane,  blind,  deaf, 
or  dumb,  and  those  who  have  lost  a  hand  or  foot  or  are  perma- 
nently disabled.^  Active  members  of  the  national  guard  are 
exempt  from  the  tax  of  50  cents  for  general  revenue  purposes. 

That  payment  of  the  poll  tax  should  be  a  prerequisite  to  voting 
was  proposed  by  Senator  A.  W.  Terrell  in  1883,  but  this  was  not 
enacted  into  law  until  1903.*  The  Terrell  Election  Law  of 
1903-5  seeks  to  prevent  the  payment  of  the  poll  tax  by  another 
and  selfishly  interested  person.^  Violations  of  this  feature  of 
the  law  sometimes  come  to  light. **  Because  the  payment  of  the 
tax  is  made  a  prerequisite  to  the  exercise  of  the  suffrage,  it  is 


^Laws  of  1882,   p.  18.     Rev.  Civil  Stats.,  1911,  art.  7354. 

^Morris  v.  Cummings,  91  Tex.,  618  (1898).  Perry  v.  City  of  Rock- 
dale, 62  Tex.,  451    (1884).     Rev.  Civil  Stats.,  1911,  art.  927. 

'Laws  of  1905,  p.  520.     Bigham  v.  Clubb,  42  Tex.  Civ.  App.,  312  (1906). 

*Laws  of  1903,  p.  133.  Laws  of  1905,  p.  520.  Rev.  Civil  Stats.,  1911, 
arts.  2938-2963.     Galveston  News,  February  2  and  15,  1883. 

"Solon  V.  The  State,  54  Texas  Crim.  Rep.,  261  (1908). 

'The  Corpus  Christi  Caller,  September  3-18,  1915,  for  the  report  of 
the  Federal  grand  jury  on  Nueces  County  election  frauds,  and  for 
8)  report  of  the  trial. 


A  Financial  History  of  Texas  317 

sometimes  called  a  fee.  In  the  contemplation  of  the  law,  how- 
ever, it  is  a  tax,  for  it  is  expected  that  every  male  person  within 
the  age  limits  shall  pay  it.  In  intention  it  is  a  compulsory  pay- 
ment levied  upon  persons  for  the  common  benefit  and  so  is  a  tax. 
For  the  payment  of  the  poll  tax  there  is  a  lien  on  the  poll 's  real 
and  personal  property,  except  the  homestead.^ 

Evasion  of  the  poll  tax  has  taken  place  to  a  great  extent.-  In 
1890  the  number  of  polls  assessed  was  382,534;  the  number  of 
these  who  were  insolvent,  delinquent,  or  erroneously  assessed 
was  111,190  or  29  per  cent.  As  the  United  States  Census  of 
1890  reported  490,632  males  between  the  age  of  21  and  60,  those 
who  were  finally  liable  for  the  tax  were  only  55  per  cent  of  those 
who  were  assessable.  Padding  of  the  rolls  by  the  assessor  in  order 
to  get  the  fee  for  assessment  explains  to  some  extent  the  great 
number  of  those  who  are  insolvent,  delinquent  or  erroneously 
assessed.^  In  1900  polls  assessed  numbered  525,823,  but  of  this 
number  179,028,  or  34  per  cent,  were  insolvent,  delinquent  or 
erroneously  assessed.  The  census  reported  674,697  males  within 
the  poll  tax  age  limits,  so  that  those  whom  the  tax  finally  reached 
were  only  51  per  cent  of  those  assessable.  In  1910  polls  assessed 
numbered  705,832,  those  insolvent,  delinquent,  and  erroneously 
assessed  were  170,713,  or  24  per  cent,  leaving  535,119  as  the  net 
number  taxed.  The  census  gave  the  male  population  between 
the  ages  of  20  and  59  to  be  932,500,  and  of  this  number  those 
taxed  constituted  57  per  cent.^  On  account  of  the  different  age 
limits  of  the  population  compared  and  because  those  who  were 
exempted  on  other  grounds  than  age  were  not  deducted,  60  per 
cent  would  perhaps  be  nearer  correct  as  showing  what  proportion 
of  those  who  are  liable  to  the  tax  paid  it.     The  percentage  was 


^Ring  V.  Williams,  13  Tex.  Crim.  App.,  609  (1896).  In  this  case 
was  upheld  the  seizure  and  sale  of  a  sewing  machine  belonging  to  the 
delinquent  poll,  though  he  owned  not  more  than  two  hundred  and  fifty 
dollars  worth  of  household  and  kitchen  furniture. 

^Report  of  the  State  Revenue  Agent,  1894.  Report  of  the  Comptroller, 
1898.     Report  of  the  Special  Tax  Commission,  1899,  p.  111. 

'Lloyd  P.  Lochridge,  in  the  Austin  Statesman,  January,  1913. 

*The  age  limits  of  the  census  population  are  not  the  same  as  those 
of  the  poll  tax  and  the  comparison  is  thereby  violated  to  a  certain 
extent.  The  census  population  would  be  smaller  if  the  poll  tax  age 
limits  were  used. 


318  Bulletin  of  the  IJniversity  of  Texas 

higher  in  1910  than  in  either  1900  or  1890,  and  this  was  without 
doubt  due  to  the  requirement  of  the  payment  of  the  tax  in  order 
to  vote.  But  this  requirement  has  not  cured  evasion,  and  the 
condition  exists  in  this  state  that  only  owners  of  real  property 
are  sure  to  be  reached. 

Elections  and  agitation  of  the  liquor  question  have  stimulated 
payment  of  the  poll  tax  by  others  than  real  property  owners. 
In  some  years  campaigns  were  carried  on  in  the  larger  cities  to 
secure  poll  tax  payments,  and  in  these  campaigns  numerous 
agencies  were  employed  to  combat  the  customary  forgetfulness, 
indifference,  and  evasion  of  the  average  citizen.  On  the  surface 
it  seemed  that  these  campaigns  were  evidences  of  rivalry  among 
the  cities,  but  it  was  charged  that  the  movements  were  inspired 
by  the  liquor  interests  of  the  state,  and  the  attorney  general's 
department  rendered  an  opinion  that  commercial  organizations 
exceeded  their  charter  powers  in  conducting  such  campaigns.^ 

The  requirement  of  the  payment  of  the  poll  tax  as  a  pre- 
requisite to  voting  has  been  attacked  recently  by  organized  labor 
as  constituting  an  "unjust  burden  upon  the  wage  worker,"  and 
its  repeal  has  been  called  for.-  In  the  United  States  the  poll 
tax  has  been  very  generally  abandoned  as  a  state  tax,  and  in  1913 
in  only  about  twenty  out  9f  forty-nine  states  was  it  levied  as  a 
state  tax.  In  only  six  of  the  twenty  states  was  the  tax  used  for 
general  purposes;  in  the  others  it  was  principally  for  school 
purposes.  In  only  four  states,  Arkansas,  Mississippi,  Tennessee 
and  Texas,  was  its  payment  a  prerequisite  to  voting.^  Without 
a  marked  changed  either  in  the  administration  of  the  law  or  in 
the  attitude  of  the  average  citizen  toward  taxation,  the  break- 
ing of  the  bond  between  the  poll  tax  and  the  vote  would  be  sure 
to  result  in  the  non-payment  of  the  tax  except  by  such  property 
owners  as  were  reached  for  property  taxation,  and  these  would 
of  course  be  mainly  real  property  owners.  The  payment  of  a 
direct  tax  by  each  citizen  is  advocated  by  some  eminent  authori- 


^Austin  American,  January  8,  1916.  This  opinion  was  disregarded  by 
some  organizations. 

-Proceedings  of  the  Texas  State  Federation  of  Labor,  1914,  p.  118. 
Austin  American,  April  28,  1916, 

'U.  S.  Census  on  Wealth,  Debt,  and  Taxation,  1913,  vol.  1. 


A  Financial  History  of  Texas  319 

ties  as  causing  a  livelier  interest  on  the  part  of  the  citizen  in  the 
expenditures  of  the  government  and  as  making  the  "people  feel 
that  the  payment  of  a  tax  is  a  necessary  accompaniment  of  the 
enjoyment  of  civil  rights."^  Since  under  the  present  methods 
of  taxation  the  poll  tax  is  the  only  direct  tax  paid  by  many 
citizens,  the  repeal  of  the  tax  would  result  in  many  eligible  tax- 
payers escaping  taxation  altogether.  The  tax  is  not  burdensome, 
except  perhaps  in  cities  which  levy  a  poll  tax.  In  such  cases  the 
total  tax — state,  county  and  city,  is  $2.75.  In  1913  out  of  91 
Texas  cities  with  a  population  of  2,500  and  over  69  employed 
the  poll  tax.^ 

State  poll  tax  receipts  show  a  decreasing  financial  import- 
ance. In  1881  they  constituted  22.9  per  cent  of  total  tax  re- 
ceipts; in  1891,  10.4  per  cent;  in  1901,  10.2  per  cent;  in  1915, 
6.1  per  cent. 


^Bullock,  Selected  Readings  in  Public  Finance,  p.  309,  quoting  Leroy- 
Beaulieu. 
-U.  S.  Census  on  Wealth,  Debt,  and  Taxation,  vol.  2,  p.  546. 


Chapter  11. 
the  inheritance  tax. 

The  taxation  of  inheritances  was  adopted  by  Texas  in  1907. 
The  tax  applies  to  "all  property  within  the  jurisdiction  of  this 
state,  real  or  personal,  corporeal  or  incorporeal,  any  interest 
therein,  whether  belonging  to  inhabitants  of  this  state  or  not, 
which  shall  pass,  absolutely  or  in  trust  by  will  or  by  the  laws 
of  descent  of  this  or  any  other  state,  or  by  deed,  grant,  sale  or 
gift,  made  or  intended  to  take  effect  in  possession  or  enjoyment 
after  the  death  of  the  grantor  or  donor,  .  .  .  passing  to  or 
for  the  use  of  any  person  except  the  father,  mother,  husband, 
wife  or  direct  lineal  descendant,  ...  or  any  public  cor- 
portation  or  charitable,  educational  or  religious  organization 
within  this  state     .     .     .     to  be  used  within  this  state.  "^ 

There  are  three  schedules  and  their  rates  differ  according  to 
the  degree  of  relationship  and  the  amount  of  the  bequest.  The 
schedules  are  as  follows : 

12  3 


-  o  q 

Lineal  ascendant,  s  t^  § 

brother,  sister,  §  S  ^             ^ 

lineal  descendant  of  ^^  '^              o  fl 

brother  or  sister.  "^  I  'o              ^  S° 

p.c.  p.c.            p.c. 

Above  $      500— not  above  $10,000...    ..  ..                 4 

Above       1,000— not  above     10,000 3 

Above  2,000— not  above  10.000.. 
Above  10,000— not  above  25,000.. 
Above  25,000— not  above  50,000.. 
Above  50,000— not  above  100,000.. 
Above  100,000— not  above  500,000.. 

Above  500,000   5  8                12 

The  tax  is  thus  one  on  collateral  heirs,  and  the  rates  are  mod- 


2 

.  . 

21/2 

4 

51/2 

3 

5 

7 

31/2 

6 

81/2 

4 

7 

10 

'Laws  of  1907,  p.  496.     Rev.   Civil   Stats.,   1911,  arts.    7487-7502. 


A  Financial  History  of  Texas  321 

erate.  It  does  not  avoid  double  taxation  of  a  vicious  sort.  Resi- 
dents of  the  state  are  taxable  on  all  tangible  property  within  the 
state  and  on  all  intangible  property  wherever  located,  the  latter 
being  in  accord  with  the  rule  that  personalty  follows  the  owner 
for  purposes  of  taxation.  Non-residents  of  the  state  are  taxable 
on  both  tangible  property  and  intangible  property  within  the 
state".  This  taxation  of  intangible  property  of  a  non-resident  is 
clearly  in  violation  of  the  rule  that  personalty  follows  the  owner. 
Probably  a  non-resident  w^ould  be  taxed  on  the  shares  of  stock 
of  a  Texas  corporation,  even  when  the  shares  are  held  outside 
the  state. 

The  tax  is  collectible  by  the  county  collectors,  and  they  receive 
one  per  cent  of  the  amount  collected.  It  is  a  state  tax  exclusively, 
and  the  receipts  accrue  to  the  general  revenue  fund.  During 
seven  years  operation  the  receipts  from  this  tax  have  averaged 
only  $32,709  a  year.  The  smallness  of  the  receipts  is  prima  facie 
evidence  that  the  state  is  losing  some  revenue  through  a  failure 
of  efficient  administration  of  the  law.  The  loss  has  been  esti- 
mated at  $500,000  annually,  but  this  is  no  doubt  an  exaggera- 
tion.^ The  loss  is  attributed  mainly  to  the  failure  of  the  pro- 
bate judge  to  certify  to  the  tax  collector  the  amount  of  the  tax 
due.  The  law,  it  seems,  does  not  provide  a  fee  for  the  probate 
judge  for  certifying  the  amount,  and  this  oversight  of  the  law- 
makers results  in  a  lightening  of  judicial  labors  and  a  lessening 
of  state  revenues. 


^Report  of  the  grand  jury  of  Travis  County,  in  the  San  Antonio 
Express,  April  30,  1916.  Comptroller  H.  B.  Terrell  stated  in  a  speech 
lit  Rockwall,  Texas,  June  24,  1916,  that  in  one  county  there  were  53 
estates  on  which  inheritance  taxes  were  unpaid,  and  he  estimated  that 
as  least  $1,000,000  was  due  throughout  the  state  as  a  whole;  San 
Antonio  Express,  June  25,  1916. 


H 


Chapter  12. 


FEES. 


There  are  administrative,  judicial,  and  educational  fees  col- 
lected. The  departments  or  branches  of  the  state  government 
which  receive  fees  which  accrue  to  the  general  treasury  are  the 
state,  comptroller's,  attorney  general's,  banking  and  insurance, 
and  public  health  and  vital  statistics  departments,  the  depart- 
ment of  agriculture,  the  land  office,  the  railroad  commission,  the 
game,  fish,  and  oyster  commissioner,  the  state  library,  and  the 
higher  courts.  The  main  University  and  the  medical  branch 
collect  fees  of  matriculates  which  accrue  to  the  available  funds 
of  the  institutions.  The  asylums  also  collect  charges,  classed 
as  fees,  of  their  non-indigent  residents.  There  are  also  num- 
erous state  boards  which  are  self-sustaining  because  of  the  fees 
of  fixed  amounts  which  they  are  permitted  to  charge.  These 
hoards  are  the  state  board  of  mine  examiners;  the  boards  of 
examiners  of  those  desiring  to  teach  in  the  public  free  schools, 
to  practice  law,  medicine,  pharmacy,  veterinary  medicine,  den- 
tistry, embalming,  and  nursing;  and  the  board  of  inspection  of 
hides  and  animals  and  of  feed  stuffs.  Except  in  the  case  of  the 
last,  there  are  not  only  no  payments  into  the  treasury,  but  no 
reports  of  the  amounts  collected  and  retained  by  the  members 
of  the  boards.  There  are  maximum  amounts  of  fees  which  dis- 
trict and  other  local  officers  can  receive,  and  any  collections  in 
excess  go  into  the  county  treasury. 

The  oldest  and  until  1893  the  most  productive  fees  were  those 
charged  by  the  general  land  office  for  patents,  certified  copies, 
etc.  Continuously  since  1893,  on  account  of  corporation  charter 
and  permit  fees,  the  state  department  has  been  the  most  im- 
portant single  source  of  fee  receipts. 

There  was  no  change  in  the  fee  law  of  1879  until  1883,  when 
express  companies  w^ere  added  to  the  list  of  corporations  whose 
minimum  charter  fee  was  $100,  and  an  increase  of  $25  for  each 
$100,000  of  capital  stock  above  $100,000  was  provided  for  in 
the  case  of  railway,  telegraph,  street  railway,  and  express  com- 


A  Financial  History  of  Texas  323 

panies.^  The  minimum  fee  of  other  private  corporations  for 
profit  was  left  at  $25,  but  an  increase  of  $5  for  each  $10,000  of 
capital  stock  above  $10,000  was  introduced.  The  fee  for  religious 
and  similar  corporations  was  increased  to  $10. 

In  1887  a  foreign  corporation  was  required  to  file  with  the 
secretary  of  state  its  articles  of  incorporation  and  to  take  out  a 
permit,  and  in  1889  permit  fees  were  adopted  varying  from  $25 
to  $200  according  to  the  amount  of  capital  stock  of  the  corpora- 
tion.^ The  fees  for  foreign  corporations  were  lower  than  for 
domestic  corporations,  except  in  the  cases  of  railway,  telegraph, 
street  railway,  and  express  companies.  Thus  a  foreign  corpora- 
tion with  a  capital  stock  of  $100,000  paid  a  fee  of  $25,  while  a 
domestic  corporation  with  an  equal  amount  of  stock  paid  $70.  A 
foreign  corporation  with  a  capital  stock  of  $2,000,000  paid  a  fee 
of  $200  while  a  domestic,  corporation  of  that  size  paid  $1,020.^ 
Following  the  discovery  of  oil  in  South  Texas  the  discrimination 
came  to  be  felt,  but  there  was  no  remedial  change  made  until 
1905.* 

In  1907  a  great  increase  in  charter  and  permit  fees  was  made 
but  without  any  discrimination  between  domestic  and  foreign 
corporations.^  In  1909  the  fee  for  corporations  not  organized 
for  private  profit  was  reduced  from  $50  to  $10.  At  the  same 
time  certain  other  fee  changes  were  adopted.^  The  minimum 
fee  chargeable  to  a  foreign  building  and  loan  company  was  made 
$250;  a  maximum  fee  of  $10,000  was  stipulated  for  a  foreign 
corporation  engaged  in  the  manufacture,  sale,  rental,  lease  or 
operation  of  all  kinds  of  cars  and  for  a  foreign  telegraph  com- 
pany; and  the  maximum  for  a  foreign  company  doing  a  loan 
business  was  fixed  at  $1,000.  Subject  to  the  above,  the  charter 
and  permit  fees  in  effect  in  1915  were  as  follows:  For  each 
charter  or  amendment  of  a  charter  of  a  private  railroad,  tele- 
graph, express,  or  street  railway  company  a  fee  of  $200  was 
prescribed,  and  if  the  capital  stock  exceeded  $100,000,  an  addi- 


^Laws  of  1883,  p.  72. 

=^Laws   of   1889,   p.    87.        "* 

^Reports  of  the  secretary  of  state,  1898,  1900,  1902,  1904. 

*Laws  of  1905,  p.  135. 

''Laws  of  1907,  p.  500. 

«Laws  of  1909,  p.  266.     Rev.  Civil  Stats.,  1911,  arts.  3837-3858. 


324  Bulletin  of  the  University  of  Texas 

tional  fee  was  charged  of  fifty  cents  for  each  $1,000  of  author- 
ized capital  stock  or  fractional  part  thereof  after  the  first.  The 
charter  fees  of  other  corporations  organized  for  private  profit 
was  $50,  but  if  the  authorized  capital  stock  exceeded  $10,000, 
there  was  an  additional  fee  of  $10  for  each  additional  $10,000  of 
the  authorized  capital  stock  or  fractional  part  thereof  after  the 
first.  Each  foreign  corporation  in  obtaining  a  permit  to  do  busi- 
ness in  the  state  had  to  pay  a  fee  of  $50  for  the  first  $10,000  of  its 
authorized  capital  stock,  and  $10  for  each  additional  $10,000  or 
fractional  part  thereof.^  The  so-called  "Blue  Sky  Law"  passed 
in  1913,  imposed  upon  corporations  subject  to  its  provisions  the 
filing  of  a  descriptive  document  with  the  secretary  of  state  be- 
fore it  was  permitted  to  sell  or  to  contract  to  sell  any  stock,  and 
the  filing  fee  for  this  document  was  made  $20.^ 

The  domestic  charter  fees  received  in  the  office  of  the  secre- 
tary of  state  during  the  fiscal  year  ending  August  31,  1915, 
amounted  to  $96,778;  the  permit  fees  of  foreign  corporations 
were  $22,025,  and  the  stock  permits  under  the  Blue  Sky  Law 
were  $520.^  In  1881  fees,  exclusive  of  those  of  the  office  of  sec- 
retary of  state,  amounted  to  $105,572,  and  of  this  amount  the 
fees  of  the  general  land  office  made  up  $94,665.  The  fees  of  the 
secretary  of  state's  office  were  not  important  at  this  time.  In 
1910  all  fees,  including  those  of  the  state  department,  amounted 
to  $430,155.*  Those  of  the  state  department  furnished  $313,214 
of  this  amount,  and  those  of  the  general  land  office  contributed 
$32,377. 


^Rev.  Civil  Stats.,  1911,  art.  3837. 

'Laws  of  1913,  First  Called  Sess.,  p.  66. 

^MSS.  Report  in  the  office  of  the  secretary  of  state.  The  total  re- 
ceipts of  the  office  as  given  in  the  manuscript  statement  are  subject 
to  an  addition  of  $28  and  to  a  deduction  of  $1,217.24. 

^Included  in  this  amount  are  all  of  the  receipts  of  the  game,  fish, 
and  oyster  commissioner,  not  all  of  whose  receipts  were   fees. 


Chapter  13. 

the  public  lands. 

The  history  of  the  public  lands  since  1880  is  difficult  to  follow 
because  of  the  frequent  changes  in  the  land  leg"islation,  the  com- 
plexity of  such  legislation,  and  the  numerous  court  decisions  af- 
fecting it.  For  convenience  of  treatment  the  public  lands  are 
divided  into :  first,  the  unappropriated  lands  and  those  reserved 
for  the  payment  of  the  public  debt  and  for  the  building  of  a  new- 
state  capitol,  and,  second,  the  lands  belonging  to  the  public  free 
school,  university,  and  asylum  funds. 

A.  TJie  JJ unappropriated  Larvds  and  the  Deht  and  Capitol 
Reservations. 
Under  the  policy  of  free  grants  to  railroads,  war  veterans, 
homesteaders,  and  to  the  public  free  school  fund,  th«  unap- 
propriated public  domain  was  rapidly  passing  from  state  owner- 
ship. During  the  years  1879-1880  the  general  land  office  issued 
certificates  for  21,287,408  acres  of  the  public  lands,  and  the 
estimated  amount  of  free  land  remaining  was,  exclusive  of  Greer 
County,  17,391,810  acres.^  In  1881  there  were  extensions  of 
this  policy.  A  grant  of  1,280  acres  was  made  to  each  disabled 
Texas  Confederate  veteran  and  to  the  unmarried  widows  of 
those  killed  in  the  Confederate  service;-  the  grant  of  640  acres 
which  was  provided  in  1879  for  each  indigent  veteran  of  the 
Texas  Revolution  was  increased  to  1,280  acres  ;^  and  300  leagues 
(1,328,400  acres)  were  reserved  for  the  benefit  of  the  free 
schools  of  unorganized  counties,  each  county  to  receive  upon  or- 
ganization four  leagues.*  During  the  years  1881-1882  certifi- 
cates were  issued  by  the  general  land  office  to  25,206,505  acres. 
The  total  area  for  which  certificates  were  issued  during  the  four 
years  1879-1882  was  46,493,913  acres,  or  48  per  cent  of  the  free 
public  domain  on  September  1,  1861. 


^Land  Office  Report,  1879-1880. 
'Laws  of  1881,  p.  122. 
'Laws  of  1881,  p.  35. 
*Laws  of  1881,  p.  65. 


326  Bulletin  of  the  University  of  Texas 

The  first  halt  to  the  policy  of  abundant  giving  away  oi'  the 
lands  was  called  in  1882,  when  all  laws  granting  land  for  the 
construction  of  railroads,  canals,  and  ditches  were  repealed/  It 
was  believed  that  there  was  not  enough  unappropriated  land  to 
justify  a  continuance  of  such  grants.-  The  last  railroad  grant 
made  by  the  national  government  was  in  1871.  The  reasons  for 
-the  discontinuance  of  national  aid  were  that  the  land  was  needed 
for  future  homesteaders  and  that  the  growth  of  population  had 
made  government  aid  less  necessary.  Such  reasons  doubtless  in- 
fluenced the  action  of  Texas  in  1882.  The  policy  of  donation  of 
land  in  aid  of  internal  improvements  had  been  followed  since 
1854,  except  during  the  years  1869-1873.  The  important  rail- 
way lines  whose  construction  Avas  aided  by  land  grants  are  the 
Houston  and  Texas  Central ;  the  Southern  Pacific ;  the  Gulf,  Col- 
orado and  Sante  Fe ;  the  Missouri,  Kansas  and  Texas ;  the  Texas 
and  Pacific ;  the  International  and  Great  Northern ;  and  the  St. 
Louis  Southwestern.  The  net  grants  to  railroads  approximated 
32,400,000  acres;  the  grants  to  other  internal  improvements 
amounted  to  4,088,000  acres,  making  -a  total  of  36,488,000  acres.* 
The  laws  required  the  railroads  to  alienate  the  lands  granted, 
but  this  requirement  was  evaded  in  some  instances  under  the 
guise  of  transfers  or  by  the  formation  of  land  companies  com- 
posed of  the  railway  stockholders.*  The  abuses,  however,  were 
minor,  and  the  land  grant  policy  by  encouraging  the  construc- 
tion of  railroads  indirectly  but  powerfully  promoted  the  growth 
of  population  and  industry  in  the  state.^ 

The  land  reserved  in  1879  for  the  purpose  of  securing  a  new 
state  eapitol  was  not  sold  piecemeal  by  the  state,  but  a  contract 
was  made  whereby  a  syndicate  built  the  eapitol  in  return  for 
3,000,000  acres. 

The  sale  of  the  land  of  the  public  debt  reservation  at  only 
fifty  cents  an  acre  turned  out  badly  for  the  state.  The  bonds  of 
the  state  could  not  be  obtained  except  by  purchase  in  the  open 


^Laws  of  1882,  p.  3. 

=The  Report  of  the  Land  Office  for  1881-2  gave  7,814,695  acres  to  be 
the  amount  by  which  the  grants  exceeded  the  available  public  domain. 
^Report  of  the  Land  Office,  1910. 
^Message  of  Governor  Culberson,  January  16,  1895. 
"The  Galveston   News,   April   14,   1882. 


A  Financial  History  of  Texas  327 

market,  and  there  they  commanded  a  high  premium.  The  high 
premium  Avas  partly  due  to  the  demand  of  the  school  fund  for 
the  bonds.  Half  of  the  proceeds  of  the  sale  of  the  lands  in  the 
public  debt  reservation  went  to  the  school  fund,  and  the  fund 
was  restricted  to  investment  in  United  States  and  State  of  Texas 
bonds.  As  long  as  this  restriction  existed,  there  was  competi- 
tion between  the  state  and  the  school  fund  in  the  purchase  of 
the  bonds,  the  state  wishing  to  cancel  them,  the  school  fund  to 
secure  them  as  an  investment.  The  urgent  need  of  a  change  in 
the  price  of  the  lands  and  in  the  purpose  to  which  the  proceeds 
of  sale  Were  devoted  were  presented  by  the  governor  to  the 
special  session  of  the  legislature  in  1882,  but  the  interest  in  con- 
gressional redistricting  and  the  strength  of  the  land  lobby  re- 
sulted in  no  change  being  then  made  by  the  legislature.^ 

The  recovery  of  industry  from  the  panic  of  1873  was  ob- 
servable in  1879,  and  the  upward  swing  of  enterprise  in  the 
years  1881,  1882  and  1883  was  pronounced,  showing  itself  in 
Texas  among  other  ways  in  feverish  land  speculation.  As  a 
result  of  the  ''Fifty  Cents  Law"  and  the  imperfect  legislation 
respecting  the  lands  of  the  school  and  other  special  funds,  the* 
public  lands  were  the  center  of  the  land  speculation.  The  inade- 
quacy of  the  land  laws  to  protect  the  interest  of  the  state  and 
of  its  trust  funds  was  realized,  and  until  the  laws  could  be  over- 
hauled the  legislature  in  1883  withdrew  all  the  public  lands  from 
sale.^  The  inroads  which  were  being  made  upon  the  unapprop- 
riated public  domain  by  the  act  granting  1,280  acres  to  disabled 
Confederate  soldiers  were  checked  by  the  repeal  of  the  act.*'' 
Under  this  land  pension  law  1,979,852  acres  were  granted.*  The 
mistakes  of  the  "Fifty  Cents  Law"  as  to  the  price  of  the  land 
and  the  disposal  of  the  proceeds  of  sale  were  stopped  by  a  re- 
grant  of  the  lands  remaining  in  the  public  debt  reservation. 
One  million  acres  were  given  to  the  State  University  and  one 
million  to  the  public  free  school  fund.^  The  total  number  of 
acres  sold  for  the  payment  of  the  public  debt  was  1,660,936.* 


'Galveston   News,   November  19,   1882. 
-"l^ws  of  1883,  pp.  2  and  3. 
^Laws  of  1883,  p.   13. 
'Land  Office  Report,  1910,  p.  30. 
•''Laws  of    1883,    p.    71. 

«Land  Office  Report,  1910,  p.  30.     The  proceeds  of  sale  were  $884,786 r 
Land  Office  Report,  1899,  p.  30. 


328  Bulletin  of  the  University  of  Texas 

In  1887  the  act  of  1881  gTanting  land  to  veterans  of  the  Texas 
Revolution  was  repealed.^  The  veterans  received  under  the  law 
of  1881  1,169,382  acres. 

In  1898  the  state  awoke  to  the  fact  that  not  only  was  the  un- 
appropriated land  exhausted  but  that  the  school  fund  had  not 
received  by  several  million  acres  the  half  of  the  unappropriated 
domain  existing  in  1876  which  the  Constitution  of  1876  had 
given  to  it.^  This  discovery  led  in  1899  to  the  abandonment  of 
the  homestead  policy.  Under  this  policy  each  head  of  a  family 
without  a  homestead  was  entitled  to  receive  free  160  acres  and 
€ach  single  person  80  acres  of  the  vacant  and  unappropriated 
public  lands,  provided  they  had  lived  on  the  land  three  years 
and  had  paid  the  surveying  and  land  office  fees  which  together 
amounted  to  between  $15  and  $20.  Under  this  law  4,847,136 
acres  were  granted  as  homesteads.^  An  accounting  between  the 
«tate  and  the  school  fund  was  made  in  1899  and  it  was  found 
that  the  school  fund  was  short  its  quota  of  land  by  5,902,076 
acres.^  In  part  settlement  of  this  deficiency  the  school  fund 
received  all  the  unsurveyed  and  unappropriated  public  lands, 
except  those  included  in  lakes,  bays,  and  islands.^  This  ap- 
propriation to  the  school  fund  in  1899  brought  to  a  close  the 
experience  of  the  state  with  its  unappropriated  public  lands.^ 


^Laws  of  1887,  p.  6. 

-Land  Office  Report,  1898.     Hogue  v.  Baker,  92  Tex.,  58  (1898). 

=Land  Office  Report,  1910. 

*Report  of  the  Commissioner  of  the  General  Land  Office  upon  the 
Findings  of  the  Special  Commission  Appointed  under  the  Act  of  March 
2,  1899.      Laws  of  1899,  p.  14.      Land  Office  Report,  1901-2. 

"^Laws  of  1899,  p.  123.  Laws  of  1900,  p.  29.  The  special  commission 
of  1899  reported  the  unappropriated  domain  to  be  5,167,075  aores 
■of  which  1,722,880  acres  were  in  lakes,  bays,  etc.  The  school  fund  re- 
ceived 4,444,195  acres. 

*Since  1895  the  state  has  charged  a  rental  for  the  use  of  oyster 
l)eds  planted  or  located  within  the  public  coast  waters.  Though  called 
:a  tax  in  the  statute,  the  charge  was  more  properly  a  rental.  In  the 
law  of  1895  it  was  ten  cents  an  acre  per  year  for  the  first  five  years 
and  twenty-five  cents  for  each  year  thereafter;  Laws  of  1895,  Reg. 
'Sess.,  p.  170.  In  1899  the  charge  was  made  fifteen  cents  per  ncre 
per  year  for  the  first  four  years  twenty-five  cents  during  the  next 
four  years,  and  $1  per  acre  thereafter.  In  1907  the  charge  of  $1 
was  changed  to  seventy-five  cents.  The  rents  are  payable  to  the 
game,  fish,  and  oyster  commissioner.  The  amount  received  cannot 
be  ascertained  from  any  official  reports. 


A  Financial  History  of  Texas  329 

B.     Lands  of  the  Puhlic  Free  School  Fund. 

The  bulk  of  the  landed  domain  of  the  state  has  gone  to  an 
endowment  of  education,  and  it  has  been  in  connection  with  the 
administration  of  this  land  endowment  that  the  most  serious 
problems  of  administering  the  public  lands  have  arisen.  In  giv- 
ing an  account  of  the  administration  of  the  lands  of  the  school 
and  other  special  funds,  it  is  most  convenient  to  divide  the  lands 
into  agricultural,  including  grazing,  and  timbered  and  mineral 
lands. 

a.     Agricultural  Lands. 

Until  1883  there  were  two  sets  of  acts  governing  the  sale  of 
school  lands ;  one  act  related  to  the  alternate  sections  which  had 
been  surveyed  by  railroad  companies  and  other  agencies  of  in- 
ternal improvement,  w^hile  the  other  act  referred  to  the  remain- 
ing lands.  The  legislation  of  1879  provided  that  the  agricultural 
lands  in  the  alternate  sections  belonging  to  the  school  fund 
should  be  sold  at  not  less  $1.00  per  acre ;  that  not  less  than  160 
acres  and  not  more  than  one  section  of  arable  land  or  three 
sections  of  grazing  land  should  be  sold  to  any  one  person;  and 
that  one-tenth  of  the  purchase  money  should  be  paid  down,  the 
balance  to  be  paid  in  nine  installments  with  interest  at  10  per 
cent.  Interest  was  payable  on  January  1  of  each  year,  and  if 
payment  should  not  be  made  by  March  1  the  law  stated  that 
the  land  should  be  forfeited.  The  provisions  in  this  law  which 
related  to  forfeiture  are  illustrative  of  the  lack  of  care  which 
characterized  the  laws  relating  to  the  public  lands.  In  the  first 
place,  the  law  of  1879,  like  that  of  1874,  made  no  provision  for 
forfeiture  on  account  of  the  non-payment  of  the  principal  at 
the  time  of  final  payment.^  In  the  next  place,  forfeiture  on  ac- 
count of  non-payment  of  interest  took  place  only  after  pro- 
ceedings looking  to  forfeiture  were  instituted  by  the  county  or 
district  attorney;  but  it  was  not  made  mandatory  upon  these 
officers  to  institute  proceedings,  nor  was  any  compensation 
provided  for  them  for  instituting  such  proceedings.  The  result 
of  these  imperfections  in  the  laws  was  that  the  officers,  having  no 


^Land  Office  Report,  1898. 


330  Bulletin  of  the  University  of  Texas 

pecuniary  incentive  to  act,  did  nothing.^  Another  and  principal 
defect  of  the  law  of  1879  was  that  the  county  surveyor  was  vir- 
tually the  classifier,  valuer,  and  seller  of  the  public  lands.  He 
was  free  under  the  act  not  to  inspect  the  land  or  even  to  know 
its  locality.  He  had  it  in  his  power  to  favor  whomsoever  he 
might,  and  the  only  central  control  over  his  actions  was  the 
rather  negative  power  of  the  commissioner  of  the  general  land 
office  to  withhold  or  withdraw  the  lands  from  the  market.^ 
These  defects  were  not  cured  in  1881  when  the  law  governing 
the  sale  of  the  school  lands  was  amended.  The  changes  made  in 
1881  were  several.^  The  district  surveyor  was  made  the  ap- 
praiser of  the  value  of  the  lands  in  unorganized  counties,  and 
the  commissioner  of  the  general  land  office  was  empowered  to 
correct  the  valuations  put  upon  lands  by  the  district  and  county 
surveyors.  The  district  surveyor  was  required  to  make  an  affi- 
davit that  he  had  personally  inspected  the  land  appraised  by 
him.  The  maximum  of  grazing  lands  not  Avithin  five  miles  of 
the  geographical  center  of  any  county  or  upon  any  water  front 
which  could  be  purchased  was  raised  from  three  sections  to 
seven.  The  maximum  amount  of  other  land  purchasable  re- 
mained at  160  acres.  The  terms  of  credit  also  were  liberalized 
by  the  provision  that  one-twentieth  of  the  purchase  money  could 
be  paid  down  and  the  balance  in  nineteen  annual  installments 
with  interest  at  8  per  cent.  Any  payment  of  principal  except 
the  first  could  be  deferred  one  or  more  years. 

The  provisions  in  the  Revised  Statutes  of  1879  relating  to  the 
school  land  dealt  with  the  lands  other  than  the  alternate  sections 
which  had  been  surveyed  by  railroads  and  other  agencies  of  in- 
ternal improvement.  These  provisions  were  that  as  soon  as  the 
lands  were  surveyed  they  should  be  sold,  but  at  not  less  than 
$1.50  per  acre.  Appraisal  of  the  value  should  be  made  by  three 
disinterested  commissioners  appointed  in  each  county  by  the 
governor.  After  valuation  the  sale  of  the  lands  should  take  place 


^Message  of  Governor  Ross,  January  10,  1889.  In  1882  the  provisions 
for  tlie  enforcement  of  the  contract  through  forfeiture  were  dropped; 
Laws  of  1882,  p.  36. 

=Land  OfHce  Report,  1882,  p.  6. 

^Laws  of  1881,  p.  119. 


A  Financial  History  of  Texas  331 

imder  the  supervision  of  the  county  surveyor.  Preference  in 
purchase  was  given  to  actual  and  prospective  settlers.  Pros- 
pective settlers  were  required  to  promise  to  settle  upon  and  im- 
prove the  land  within  twelve  months  from  application  for  pur- 
chase. Land  not  purchased  by  an  actual  or  prospective  settler 
within  two  years  from  date  of  notice  of  sale  could  be  purchased 
by  any  one.  The  maximum  amount  purchasable  was  160  acres, 
the  minimum  80  acres.  One-tenth  of  the  purchase  price  was 
payable  down,  the  balance  bore  ten  per  cent  interest,  and  the 
interest  and  one-tenth  of  the  principal  were  payable  March  1 
each  year.  Failure  to  pay  either  interest  or  the  installment  of 
the  principal  worked  forfeiture.^ 

In  1882  there  was  feverish  land  speculation.  The  advent  of 
the  Gould  and  the  Palmer- Sullivan  systems  of  railroads  was  a 
fillip  to  enterprise  and  speculation,  and  contributory  factors  in 
the  promotion  of  speculation  were  the  ''Fifty  Cents  Law"  and 
the  imperfect  land  laws.  All  the  abuses  possible  under  the  land 
laws  made  their  appearance.  The  only  object  of  the  "Fifty 
Cents  Law"  was  revenue,  but  this  was  not  the  only  purpose  in 
the  sale  of  school  lands.  The  limitation  in  the  laws  of  the  amount 
of  school  land  which  any  one  person  could  purchase  from  the 
state  was  in  the  interest  of  the  settler ;  but  there  was  evasion  of 
the  provision  through  the  use  of  borrowed  names  and  the  names 
of  the  wife  and  children  of  the  applicant  for  land,  and  vast 
tracts  of  lands  of  from  100,000  to  1,000,000  acres  were  acquired. 
Wealthy  individuals  and  corporations  acquired  these  vast  bodies 
for  pasture  purposes  or  for  speculation.-  The  interests  of  the 
actual  settler  were  in  this  way  defeated,  but  the  other  purposes 
of  the  legislation,  that  is,  to  swell  the  school  fund  and  increase 
the  basis  of  taxation,  wxre  accomplished.^  Another  abuse  dur- 
ing the  period  was  that  practiced  by  the  so-called  ''county  seat 
rings."  The  persons  composing  the  "rings"  would  by  the  use 
of  borrowed  or  fictitious  names  file  application  for  the  valuable 
sections  of  land  in  the  county.  The  land  filed  on  would  be  with- 
drawn from  the  market  for  ninety  days,  but  if  at  the  expiration 


^Rev.  Civil  Stats.,  1879,  title  81,  chap.  3. 

^Land   Office   Report,    1911-12,   p.    26. 

^Land  Office  Report,  1882.     The  Galveston  News,  April  6  and  8,  1882. 


332  Bulletin  of  the  University  of  Texas 

of  that  time  the  "file"  was  not  sold  to  a  bona  fide  purchaser 
members  of  the  ring-  would  file  anew.  This  practice  was  repre- 
hensible chiefly  because  bona  fide  purchasers  were  forced  to  make 
terms  with  the  ringsters.^  The  fact  that  the  ringsters  were  able 
to  extort  a  bonus  from  intending  bona  fide  purchasers  was  proof 
of  the  undervaluation  of  the  land  and  of  a  resulting  financial 
loss  to  the  school  fund.  The  interests  of  the  school  fund  suf- 
fered also  from  the  undervaluation  and  improper  classification 
of  the  lands. 

Another  abuse  during  the  period  was  the  free  use  of  the  school 
lands  for  pastures.  This  was  the  ' '  free  grass ' '  policy  which  had 
always  been  followed  in  Texas.  An  unsuccessful  attempt  was 
made  in  1881  to  introduce  the  lease  system.-  The  attempt  was 
again  made  in  1882  to  end  the  '^free  grass"  policy,  but  it  was 
bitterly  opposed  by  the  stockmen  and  defeated.^  The  interests 
of  the  school  fund,  the  stockmen,  and  the  farmers  were  involved 
in  the  proposed  change  in  policy.  While  there  should  have  been 
no  free  grass,  the  cattle  industry  was  too  important  to  the  state 
to  be  discouraged.  The  ranches  represented  great  wealth  to  the 
state,  and  their  owners  had  been  the  pioneers  of  law  and  order 
in  their  dealings  with  the  Indians,  marauding  Mexicans  and 
other  thieves.  The  stockmen  contended  that  if  the  lease  policy 
should  be  adopted,  it  should  be  one  of  long  leases,  otherwise 
they  would  not  be  justified  in  digging  wells  on  the  unwatered 
lands  or  of  building  fences  and  in  other  ways  making  the  land 
suitable  for  use.  Long  leases  under  this  policy,  however,  would 
retard  settlement  and  condemn  the  cattle  country  to  a  meager 
population  and  incomplete  development.'*  The  school  fund  was 
interested  in  getting  as  much  revenue  as  possible,  and  since  sale 
to  settlers  would  be  slow  the  largest  immediate  revenue  would  be 
gained  by  leasing  to  stockmen  or  selling  immense  tracts  to  land 
corporations.  There  was  general  opposition,  however,  to  the 
sale  of  lands  to  land  corporations. 

These  defects  in  the  land  laws  and  policies  confronted  the  lepr- 
islature  which  met  in  1883.    The  act  of  February  8,  1883,  with- 


^The  Galveston  News,  May  19,  1882.     Land  Office  Report,  1882. 
=The  Galveston  News,  February  22,  1881. 

^The  Galveston  News,  March  22,  24,  April  22,  and  May  19,  1882. 
*The  Galveston  News,  September  27,  1882. 


A  Finmicial  History  of  Texas  333 

drew  from  sale  all  the  school  lands,  and  the  act  of  April  12,  1883, 
established  a  new  system  for  the  classification,  sale  and  lease 
of  the  lands,  and  did  away  with  the  necessity  of  consulting  two 
different  acts  as  had  been  necessary  during  the  preceding  four 
years.  The  changes  made  affected  principally  the  prices  of  land, 
the  maximum  amounts  purchasable,  and  the  lease  of  pasture 
lands. ^  The  administration  of  the  lands  was  given  to  a  board 
called  the  State  Land  Board,  which  was  made  up  of  state  offi- 
cials acting  in  an  ex-officio  capacity.^  Agricultural  and  pasture 
lands  were  to  be  classified  into  watered  and  unwatered,  and  the 
minimum  price  put  on  watered  land  was  $3  per  acre,  on  un- 
watered land,  $2  per  acre.  The  maximum  of  agricultural  or 
watered  land  w^hich  could  be  purchased  by  one  person  was  fixed 
at  640  acres,  and  the  maximum  of  unwatered  land  at  4,480  acres. 
The  minimum  amount  which  could  be  purchased  was  160  acres 
of  agricultural  land  and  80  acres  of  timber  land.  A  corpora- 
tion was  not  permitted  to  acquire  title  to  more  than  640  acres  of 
land  in  any  one  county.  Agricultural  land  could  be  sold  only 
to  settlers,  and  purchasers  of  such  land  w^ere  required  to  swear 
that  they  would  settle  upon  the  land  within  six  months.  The 
actual  occupancy,  use,  and  improvement  of  the  land  for  three 
consecutive  years  were  required  of  a  purchaser  before  a  patent 
was  issuable  to  him ;  though  it  was  provided  that  the  purchaser 
could  sell  after  the  payment  of  the  first  installment  of  the  prin- 
cipal, and  it  was  not  specifically  stated  that  the  vendee  should 
be  an  actual  settler.  The  land  board  inserted  as  a  part  of  the 
contract  for  purchase  that  the  purchaser  should  occupy  the  land 
within  ninety  days  after  the  award  of  the  land  to  him,  that  occu- 
pation should  continue  for  three  consecutive  years,  and  that 
abandonment  of  the  land  or  sale  to  other  than  an  actual  settler 
during  the  three  years  of  required  occupancy  should  work  a  for- 
feiture of  the  land  and  payments.^     The  land  board  appointed 


^Laws  of  1883,  p.  85. 

^The  constitutionality  of  the  land  board  was  upheld  in  Arnold  v. 
State,  71  Tex.,  239  (1888).  For  the  resolutions  passed  by  the  land 
board  see  Sayles,  op.  cit.,  pp.  363-390. 

^Report  of  the  State  Land  Board,  1885,  p.  8.  In  1889  the  legislature 
validated  the  titles  of  venders  and  assignees  in  cases  where  the  original 
purchaser  failed  to  comply  with  the  law  and  the  requirements  of  the 
land  board   as  to  settlement;    Laws  of   1889,   p.   107. 


334  Bulletin  of  the  University  of  Texas 

some  one  to  represent  the  state  in  each  county  or  land  distri(it. 
Bids  for  the  purchase  of  land  were  made  to  this  representative, 
and  the  land  went  to  the  highest  bidder.^  One-thirtieth  of  the 
purchase  price  was  payable  down,  and  the  remainder  was  pay- 
able in  twenty-nine  installments  with  interest  at  5  per  cent. 
Failure  to  settle  upon  the  land  within  the  prescribed  six  months 
worked  a  forfeiture  of  the  land  and  of  the  money  paid  on  it. 
Forfeiture  occurred  also  if  the  interest  should  not  be  paid  by 
March  1,  but  there  was  nothing  to  prevent  the  postponement  of 
the  payment  of  the  annual  installments  of  the  principal  until  the 
whole  sum  was  due. 

The  legislation  of  1883  provided  also  for  the  leasing  of  the 
public  lands  for  pastures.  The  minimum  rental  was  fixed  by 
law  at  four  cents  an  acre,  and  the  maximum  period  of  a  lease 
at  ten  years;  and  the  leased  land  was  made  subject  at  any 
time  to  purchase  for  settlement.  These  conditions  for  leasing 
fell  short  of  what  the  stockmen  wanted.  They  had  asked  for 
a  maximum  rental  of  two  cents  an  acre  and  a  minimum  period 
of  lease  of  twenty  years.- 

The  legislation  of  1883  was  primarily  for  the  benefit  of  the 
small  settler  and  not  for  the  large  speculative  buyer  and  the 
cattleman.  This  purpose  was  indicated  by  the  limitations  on 
the  amount  of  land  which  could  be  purchased  and  by  the  pro- 
visions in  the  law  in  regard  to  leases.  The  provisions  of  the 
law  were  not  proof,  however,  against  large  holdings,  since  these 
could  be  accumulated  through  purchase  by  friends,  relatives 
and  figureheads,  and  by  transfers  subsequent  to  the  statutory 
three  years. ^  So  insufficient  was  the  legislation  to  ensure  good 
faith  on  the  part  of  purchasers  for  settlement  that  the  land 
board  in  1883  refused  to  put  on  the  market  the  watered  lands. '^ 


^The  first  method  of  bidding  prescribed  by  the  land  board  was  one 
of  written  bids  registered  with  the  surveyor  of  the  county  and  open 
to  inspection;  Resolution  No.  1,  October  23,  1883.  This  method  was 
succeeded  by  one  of  competitive  bidding  at  public  outcry;  Resolution 
No.  7,  February  9,  1884.  A  sale  under  the  first  method  was  held  to 
be  void. 

-Proceedings  of  the  Stockmen's  Convention,  in  the  Galveston  News, 
February  7  and  10,  1883. 

^The  Galveston  News,  April  25,  1883. 

^Report  of  the  State  Land  Board,  1885. 


A  Financial  History  of  Texas  335 

It  limited  to  1,280  acres  the  amount  of  pasture  land  which  one 
person  could  purchase. 

The  first  leasing  of  the  public  lands  took  place  in  January, 
1884,  and  was  at  the  minimum  rental  of  four  cents  an  acre. 
The  land  board  decided  that  the  competition  under  whic,h  the 
leasing  took  place  was  a  farce,  because  the  cattlemen,  either 
by  agreement  or  the  force  of  custom,  respected  one  another's 
^'ranges."  The  land  board,  therefore,  in  February,  1884,  ad- 
vanced the  minimum  rental  to  eight  cents  an  acre  for  unwatered 
lands  and  twenty  cents  an  acre  for  watered  lands.^  The  refusal 
to  lease  at  less  than  eight  cents  an  acre  precipitated  a  struggle 
with  the  cattlemen  which  is  notable  in  Texas  history.  The 
cattlemen — described  popularly  as  free-grass  barons — defied  the 
land  board  and  refused  to  pay  anything,  and  on  account  of 
sympathetic  juries  escaped  conviction  for  violation  of  the  law.^ 
Farmers  and  other  freeholders  in  the  stock  country  complained 
of  being  so  enclosed  by  the  barbed  wire  fences  of  the  ranches 
that  they  had  no  entrance  to  or  egress  from  their  holdings, 
and  there  broke  out  in  the  latter  part  of  1883  an  epidemic  of 
wire  cutting.  The  oifenses  committed  by  the  cattlemen  and 
the  fence  cutters  made  necessary  a  special  session  of  the  legis- 
lature, which  met  in  January,  1884.^  Fence  cutting  w^as  made 
an  offense  punishable  by  confinement  in  the  penitentiary,  the 
opening  of  roads  through  pastures  was  required,  and  the  un- 
lawful fencing  of,  or  herding  upon,  the  public  lands  was  made 
a  misdemeanor.*  Though  the  acute  stage  of  the  controversy 
passed  and  violence  ceased,  intimidation  of  those  who  would 
settle  as  farmers  upon  the  ranges  continued,  as  did  also  un- 
law^ful  free  use  of  the  public  grass.^    It  was  found  in  1887  that 


^Report  of  the  State  Land  Board,  1885.  Land  Office  Report,  1886. 
Galveston  News,  July  5,  1888.  This  action  of  the  land  board  in 
adopting  a  minimum  higher  or  other  than  that  laid  down  in  the  law- 
was  declared  unconstitutional  in  Smisson  v.  State,  71  Tex.,  222   (1888). 

^Land  Office  Report,  1886. 

^Proclamation  of  Governor  Ireland,  October  15,  1883.  The  Galveston 
News,  June  17,  1883,  and  January  22,  23,  30,  February  7,  12,  April  10, 
and  June  26,  1884. 

^Laws  of  1884,  pp.  34  and  68. 

"Laws  of  1885,  p.  83. 


336  Bulletin  of  the  University  of  Texas 

over  three  and  a  half  million  acres  of  the  public  lands  were 
unlawfully  fenced  or  used  by  the  "free-grass  barons,"  so  an 
act  was  passed  which  defined  more  exactly  the  offence  and 
increased  the  penalties  for  the  unlawful  use  of  the  public  lands/ 
As  late  as  1899  the  unlawful  free  use  continued,  and  two  agents 
were  'appointed  to  investigate.-  After  this  the  unlawful  prac- 
tice disappeared.  In  1887  the  maximum  term  of  a  lease  was 
made  five  years,  the  rental  was  fixed  at  four  cents  an  acre,  and 
it  was  provided  that  lands  classified  as  grazing  could  not  be 
sold  during  the  period  of  lease.  These  conditions  of  leasing 
w^ere  more  satisfactory  to  the  cattlemen  than  the  former  ones. 
These  changes  in  the  system  of  leasing  were  only  a  part  of 
the  changes  made  in  1887  in  the  land  laws.  The  administration 
of  the  lands  by  the  land  board  worked  badly,  confusion  existed 
because  of  the  many  changes  by  the  board  in  the  methods  of 
selling  and  leasing,  and  the  provision  for  the  classification  of 
the  lands  was  very  imperfect.^  So  in  1887  a  complete  revision 
of  the  land  laws  was  made.*  The  land  board  was  abolished 
and  control  was  concentrated  in  the  hands  of  the  commissioner 
of  the  general  land  office,  subject  to  approval  by  the  governor. 
It  was  provided  that  a  more  careful  classification  of  the  lands 
should  be  made  by  state  agents.  Under  former  laws  the  county 
surveyor  was  entrusted  ^ith  the  responsibility  of  classification. 
The  maximum  of  unwatered  pasture  land  purchasable  by  one 
person  was  reduced  from  4,480  acres  to  2,560  acres.  The  maxi- 
mum of  agricultural  land  purchasable  by  one  person  Avas  fixed 
at  640  acres,  the  minimum  at  160  acres,  except  in  the  case  of 
scrap  lands.  It  was  required  of  a  purchaser  of  agricultural 
land  to  swear  that  he  "desired  to  purchase  the  land  for  a 
home,"  that  he  was  buying  for  himself  and  was  not  acting  in 
collusion  with  any  other  person.  The  purchaser  was  required 
to  reside  upon  the  land  three  years  before  the  state  would  pass 


^The  Galveston  News,  July  5,  1888.  Laws  of  1887,  p.  83.  This  un- 
lawful free  use  resulted  in  an  estimated  loss  of  over  $567,000  to  the 
school  and  other  special  funds. 

^Laws  of  1899,  p.  176.     Land  Office  Report,  1900-2. 

'Message  of  Governor  Ireland,  January  11,  1887.  Message  of  Governor 
Ross,  January  20,  1887. 

*Laws  of  1887,  p.  83. 


A  Financial  History  of  Texas  337 

title  to  him,  but  he  could  be  absent  from  the  land  as  much  as 
six  months  a  year.  The  act  of  1887  was  more  specific  in  these 
respects  than  was  the  act  of  1883.  This  residence  provision  of 
the  law  has  been  a  part  of  all  subsequent  legislation  and  has 
been  the  occasion  of  "untold  perjury."^  Sale  to  a  corporation 
was  strictly  prohibited.  The  period  allowed  for  the  payment 
of  the  principal  of  the  purchase  money  for  agricultural  land 
was  extended  to  forty  years,  but  the  rate  of  interest  on  the 
unpaid  installments  was  left  at  5%.  It  was  provided  also  that 
forfeiture  should  occur  only  upon  failure  to  pay  the  interest 
by  August  the  first  each  year.  This  restored  the  provision  for 
forfeiture  which  had  been  repealed  in  1885. 

Under  the  provisions  and  amendments  of  the  acts  of  1883 
and  1887,  11,837,389  acres  of  school  lands  were  sold,  but  7,684,- 
503  acres  were  forfeited,  leaving  4,152,886  as  the  net  amount 
sold.  The  number  of  acres  leased  was  6,505,403,  but  of  this 
amount  only  77,437  acres  were  university  lands.  There  had 
been  surveyed  for  the  University  under  the  act  of  1879,  984,960 
acres,  and  under  the  act  of  1883,  1,087,917  acres.^  The  univer- 
sity lands  surveyed  under  these  acts  were  located  in  Tom  Green, 
Pecos,  Crockett,  Upton,  Irion,  Andrews,  Ward,  Martin,  Loving, 
Winkler,  Crane,  Ector,  Schleicher,  Presidio,  and  El  Paso  coun- 
ties.^ The  new  university  lands  and  the  poorer  school  lands 
were  not  well  situated  with  respect  to  population  and  were 
not  supplied  with  water,  and  these  unfavorable  conditions 
called  for  leasing  terms  which  were  different  from  those  which 
applied  to  the  better  school  lands.  Accordingly  in  1889  it  was 
provided  that  university  lands  could  be  leased  at  three  cents 
an  acre  and  for  as  long  a  period  as  ten  years,  and  that  school 
and  asylum  lands  lying  north  of  the  Texas  and  Pacific  Railroad 
and  east  of  the  Pecos  could  be  leased  for  a  period  of  six  years, 
and  those  south  of  the  railroad  and  west  of  the  river  for  ten 
years.  This  was  the  beginning  of  the  ''lease  line."  The  rental 
of  the  school  and  asylum  lands  was  fixed  at  four  cents  an  acre, 


^Land  Office  Report,  1907-8. 

*Land   Office   Report,    1901-2.     The    siirvej^s    under   the   acts   of    1839 
and  1856  amounted  to  216,805  acres. 
*Land  Office  Report,  1901-2,  pp.  34-7. 


22— H 


338  Bulletin  of  the  University  of  Texas 

and  no  grazing  land  under  lease  was  subject  to  purchase. 
Purchasers  of  lands  were  allowed  until  the  January  first  follow- 
ing the  preceding  August  first  to  pay  interest  past  due,  but  a 
penalty  of  50%  on  the  past  due  amounts  was  fixed.  This  was 
a  method  of  relief  from  the  forfeiture  provisions  of  the  law, 
and  the  extension  of  such  relief  has  been  rendered  necessary 
more  than  once  by  the  protracted  drouths  from  which  the 
western  parts  of  the  state  have  suffered. 

Other  features  of  the  land  legislation  of  1889  were  the  lower- 
ing of  the  minimum  of  agricultural  land  purchasable  from  160 
acres  to  80  acres  and  the  repeal  of  the  pre-emption  law.^  As 
the  privilege  of  pre-emption  was  being  abused  by  men  who 
were  interested  in  speculating  in  land  and  in  forming  large 
holdings  instead  of  in  settling  upon  the  land,  the  repeal  of  the 
privilege  became  necessary.^ 

The  years  1889  and  1890  were  years  of  active  settlement  and 
material  development  of  the  state,  and  these  conditions  were 
favorable  to  an  increase  in  land  sales  and  leases  under  the  new 
legislation.  At  the  end  of  1888  only  77,437  acres  of  university 
lands  were  under  lease,  but  at  the  end  of  1890  there  were 
247,997  acres.  School  lands  leased  increased  from  6,327,966 
acres  in  1888  to  7,130,434  in  1890.  Receipts  from  land  sales 
by  the  various  funds  increased  from  $187,235  in  1888  to  $540,735 
in  1890. 

In  1891  the  time  allowed  for  the  payment  of  interest  on  land 
purchases  was  extended  from  November  1  to  April  1,  and  the 
lease  line  was  slightly  changed.^  The  drouth  in  1892  resulted 
in  the  date  for  the  payment  of  interest  being  extended  from 
April  1  to  November  1.* 

In  1895,  in  response  to  a  demand  from  the  West,  a  general 
revision  of  the  land  laws  occurred.^  This  was  th^  first  general 
revision  after  1889.  The  minimum  amount  of  agricultural  land 
which  could  be  purchased  was  reduced  from  80  acres  to  40 
acres  and  the  maximum  amounts  were   one   section   of  as'ri- 


*Laws  of  1889.  p.  16. 
^Land  Office  Report,  1888. 
^Laws  of  1891,  p.  180. 
*Laws  of  1893,  p.  30. 
•Laws  of  1895,  pp.  63  and  7.5. 


A  Financial  History  of  Texas  339 

cultural  and  three  sections  of  grazing  lands.  The  minimum 
prices  fixed  were  $2.00  per  acre  for  agricultural  land  and  $1.00 
per  acre  for  grazing  lands.  Though  the  period  of  credit  re- 
mained forty  years,  the  interest  rate  was  reduced  to  three  per 
cent.  Watered  agricultural  lands  could  be  leased  for  five  years 
and  unwatered  lands  and  grazing  lands  for  ten  years.  Unlike 
the  acts  of  1887  and  1889,  the  law  of  1895  did  not  stipulate 
the  absolute  lease  prices,  but  prescribed  a  minimum  rental  of 
three  cents  an  acre  for  agricultural  and  watered  lands  and  two 
cents  an  acre  for  grazing  lands,  and  provided  that  the  lands 
should  be  leased  to  the  highest  bidder.^  The  control  of  the 
university  lands  was  vested  in  the  board  of  regents  of  the 
University,  with  the  condition  that  these  lands  should  not  be 
sold  for  less  than  the  same  class  of  lands  belonging  to  the  other 
funds. - 

The  changes  in  the  land  laws  in  1897  are  historical  because  of 
the  loss  which  the  school  fund  suffered.^  The  minimum  amount 
of  agricultural  land  which  could  be  purchased  was  increased  from 
forty  acres  to  eighty  acres ;  and  though  the  maximum  amount  of 
agricultural  and  grazing  land  which  could  be  purchased  together 
remained  at  four  sections,  two  of  these  sections  could  be  of  agri- 
cultural land.  The  price  of  agricultural  land  was  reduced  from 
$2  per  acre  to  $1.50  per  acre.  Land  which  had  been  erroneously 
classified  could  be  reclassified  upon  the  certificate  of  the  comir.is- 
sioners'  courts.  Leased  lands  were  subject  to  sale  at  any  time, 
except  where  the  lessee  had  made  substantial  improvements,  and 
except  within  certain  territory  described  in  the  statute.  The 
operation  of  the  legislation  of  1895  and  1897  was  injurious  to  the 
interest  of  the  school  fund  in  the  following  way :  As  a  forfeiting 
purchaser  had  a  preference  right  for  ninety  days  to  repurchase 
his  land  after  it  had  been  forfeited  for  non-payment  of  interest, 
the  reduction  in  price  and  the  reclassification  provided  for  in  the 
acts  of  1895  and  1897  encouraged  forfeiture  and  crooked  reclass- 
ification.    Land  which  had  been  classified  as  agricultural  and  sold 


^The  Houston  Post,  March  12  and  14,  1895. 

-Laws  of  1895,  p.  19.  The  control  of  the  university  mineral  lands 
was  not  given  to  the  board  of  regents  until  1901;  Laws  of  1901,  Reg. 
Sess.,  p.  266. 

^Laws  of  1897,  p.  184. 


340  Bulletin  of  the  University  of  Texas 

at  $2  and  $3  per  acre  was  forfeited,  its  reclassification  as  grazing 
land  was  effected,  and  it  was  repurchased  by  the  forf (dting  pur- 
chaser at  $1  an  acre.  The  loss  to  the  school  fund  caused  by  this 
fraudulent  reclassification  was  estimated  to  be  between  eight  and 
twelve  million  dollars.^ 

In  1898  it  was  found  that  the  school  fund  had  not  received 
5,902,076  acres  to  which  it  was  entitled  by  the  provision  of  the 
Constitution  of  1876.  This  shortage  Avas  due  to  the  fact  that 
except  in  the  case  of  railroads  surveys  for  such  purposes  as  home- 
stead, military,  and  other  grants  had  not  been  accompanied  by 
surveys  of  equal  amounts  for  the  school  fund.^  In  settlement  of 
the  deficiency  there  was  appropriated  to  the  school  fund  all  of 
the  lands  which  had  been  or  which  might  be  recovered  from  rail- 
way companies  and  other  sources,  amounting  to  1,440,701  acres ; 
all  of  the  unsurveyed  and  unappropriated  public  lands,  except 
those  included  in  lakes,  bays,  and  islands,  amounting,  as  then 
estimated,  to  4,444,195  acres,  and  $17,180,  this  being  the  value 
at  $1  per  acre  of  the  number  of  acres  necessary  to  complete  the 
amount  due.'"'  The  land  included  in  this  appropriation  was  in 
general  the  poorest  of  the  western  lands,  and  the  conditions  under 
which  it  could  be  sold  were  different  from  those  which  attached  to 
other  school  lands.  A  minimum  price  of  $1.00  per  acre  was 
stipulated,  amounts  of  640  acres  or  less  could  be  purchased  for 
cash  only  and  without  the  condition  of  settlement,  and  preference 
rights  of  purchase  were  accorded  first  to  settlers  and  second  to 
leaseholders.* 

In  1901  a  general  revision  of  the  law  governing  the  sale  of 
school  and  asylum  lands  was  made.^  The  principal  changes  were 
that  applications  for  purchase  or  lease  should  be  filed  with  the 
county  clerk,  instead  of  with  the  commissioner  of  the  General  land 


^Land  Office  Report.  1899-1900,  1901-2.  Message  of  Governor  Sayers, 
January  10,  1901. 

^Land  Office  Report,  1901-2. 

'Laws  of  1899,  p.  123.  Laws  of  1900,  p.  29.  Since  1900  small  tracts 
of  unappropriated  land  have  been  discovered  which  have  resulted  in 
the  school  fund  receiving  555,283  acres  more  than  the  4,444,195 
acres;  Land  Office  Report,  1901-2,  p.  8. 

^Laws  of  1900,  p.  29. 

•■^Laws  of  1901,  p.  292. 


A  Financial  History  of  Texas  341 

office,  as  was  formerly  the  requirement;  and  that  four  sections 
of  land  could  be  purchased  by  one  person  regardless  of  whether 
the  land  was  agricultural  or  grazing  land. 

Under  the  laws  of  1895,  1897,  and  1901  the  lessee  had  at  the 
expiration  of  his  lease  a,  prior  right  to  purchase  as  a  settler  the 
land  which  he  had  leased.  This  gave  lessees  an  advantage  over 
others,  and  it  was  often  abused  so  as  to  force  homeseekers  to  pay 
a  bonus  to  speculating  lessees  or  to  other  speculators  who  had 
inside  information  as  to  the  time  leases  expired.  Even  some 
lessees  who  were  ignorant  of  the  time  their  leases  expired  were 
compelled  to  pay  large  bonuses  to  the  members  of  the  courthouse 
rings,  or  to  the  lawyers  and  land  agents  who  infested  the  Pan- 
handle and  West  Texas  and  who  were  ever  on  the  alert  to  file  on 
land  which  was  coming  on  the  market.  The  competition  to  file 
on  land  which  was  coming  on  the  market  was  so  keen  that  violence 
and  bloodshed  resulted  in  some  cases.  So  acute  for  a  time  was 
the  danger  of  trouble  and  so  farcical  was  the  opportunity  for  the 
peaceful  homeseeker  to  secure  land  that  the  legislature  in  iy03 
suspended  for  ninety  days  the  privilege  of  filing  on  lands  which 
were  coming  on  the  market  through  the  expiration  of  leases.^ 
There  was  no  revision  of  the  law,  however,  until  1905. 

In  the  revision  of  1905  the  very  important  innovation  was 
made  of  requiring  that  school  and  asylum  lands  under  lease 
-should  be  widely  advertised  before  they  became  subject  to  sale, 
that  written  bids  for  the  purchase  of  the  land  should  be  sub- 
mitted to  the  commissioner  of  the  general  land  office,  and  that 
the  land  should  be  sold  to  the  highest  competitive  bidder,  pro- 
vided that  the  price  bid  should  not  be  less  than  the  appraised 
value  fixed  by  the  commissioner.-  Unsurveyed  vacant  school 
lands  of  which  there  was  no  record  on  the  official  maps  of  the 
land  office,  unsurveyed  swamp  lands,  and  unsurveyed  vacant 
tracts  of  between  80  and  640  acres  of  which  there  was  a  record 
on  the  official  maps  but  wliich  were  entirely  surrounded  by  valid 
surveys,  could  be  purchased  for  cash  or  on  forty  years  time  and 
five  per  cent  interest,  and  without  the  conditions  of  residence  and 
improvements  upon  the  land  which  were  imposed  upon  purchasers 


^Laws  of  1903,  p.  242. 
'Laws  of  1905,  p.  159. 


342  Bulletin  of  the  University  of  Texas 

of  other  lands.  Unsurveyed  tracts  of  80  acres  or  less  could  be 
purchased  only  for  cash.  The  maximum  amount  of  land  which 
could  be  purchased  by  a  person  remained  four  sections,  including 
former  purchases,  except  that  eight  sections  in  the  extreme  west- 
ern counties  could  be  purchased. 

Land  which  was  not  in  demand  for  settlement  could  be  leased, 
and  the  original  lessee  or  assignee  was  given  the  preference  in 
securing  another  lease,  provided  he  paid  the  highest  bid  which 
could  not  be  less  than  three  cents  an  acre.  Original  lessees  or  the 
assignees  of  leases  were  given  the  preference  in  buying  land  out 
of  their  leased  land,  though  this  privilege  was  limited  to  the 
existing  leaseholders  or  their  assignees.  This  preference  privilege 
was  abused  by  cattlemen  who  because  they  were  not  permitted 
by  Jaw  to  purchase  for  themselves  as  much  land  as  they  wanted 
lirst  assigned  their  leases  to  their  sons  and  daughters  and  em- 
ployees who  fulfilled  the  conditions  of  purchase  and  then  sold  to 
the  former  lessees — the  cattlemen.  This  practice  tended  to  de- 
feat the  settlement  purpose  of  the  law.^  Amendments  to  the  law 
which  were  made  in  1907  were  intended  to  minimize  the  possibility 
of  abuses  arising  under  the  law.  The  amendments  of  1907,  1913, 
and  1915  modified  a  lessee's  privilege  to  purchase  out  of  his 
lease,  defined  anew  the  conditions  as  to  settlement,  provided  in 
the  case  of  some  lands  for  purchase  without  settlement,  and  lim- 
ited the  privilege  of  transferring  land  which  had  been  bought  on 
condition  of  settlement.^ 

h.     Timber  Lands  and  Timber. 

Texas  is  one  of  the  principal  yellow  pine  lumber  states,  and 
the  timber  lands  which  are  the  source  of  supply  of  this  valuable 
product  were  not  so  very  long  ago  a  part  of  the  public  domain. 
The  history  of  the  timber  lands  up  to  1880  shows  that  a  very 
loose  policy  was  pursued  by  the  state.  Through  fraudulent  class- 
ification or  through  careless  valuation  the  lands  were  sold  for  less 

^Land  Office  Report,  1907-8. 

-Laws  of  1907,  Called  Sess.,  p.  490.  Laws  of  1909,  Second  Called 
Sess.,  p.  429.  Rev.  Civil  Stats.,  1911,  arts.  5405-5459.  Laws  of  1911, 
Reg.  Sess.,  p.  154.  Laws  of  1913,  Reg.  Sess.,  p.  336.  Laws  of  1915,. 
Reg.   Sess.,  p.  256. 


A  Financial  History  of  Texas  343 

than  their  value,  and  wholesale  theft  of  timber  went  on   un- 
checked.^ 

The  legislation  of  1879  with  respect  to  timber  lands  was  Yery 
loose.  The  only  reference  to  them  in  the  act  of  1879  providing 
for  the  sale  of  the  school  lands  was  to  prohibit  the  cutting  of  the 
timber  until  the  purchase  price  of  the  land  had  been  paid  in  fulL 
The  law  stated  no  limit  to  the  amount  of  timbered  land  which  one 
person  could  purchase,  and  prescribed  no  other  minimum  value 
than  the  one  dollar  an  acre  for  school  land  in  general.^  The 
glaring  defects  of  this  legislation  were  that  valuation  was  left  to 
the  county  officials,  that  there  was  no  adequate  minimum  value 
fixed,  and  that  it  was  permitted  to  purchase  timbered  lands  on 
credit.  The  legislation  of  1881  did  nothing  towards  correcting 
these  defects,  except  that  it  authorized  the  commissioner  of  the 
general  land  office  to  approve  or  disapprove  the  values  put  upon 
land  by  the  surveyor  and  county  commissioners.^  The  commis- 
sioner of  the  general  land  office  said  in  his  report  of  1882  that  ''in 
most  of  the  counties  the  surveyor  and  county  commissioners  have 
declined  to  increase  the  valuations,  and  in  others  the  increase  did 
not  meet  my  expectations,  and  the  result  is  that  this  wealth  of: 
pine  remains  the  property  of  the  common  schools,  and  awaits  the* 
further  action  of  the  legislature." 

In  1882  it  was  enacted  that  no  pine  timbered  land  should  be 
sold  for  less  than  $5.00  an  acre.*  This  land  had  been  selling  at 
$1.00,  $1.50,  and  $2.00  an  acre,  and  the  school  fund  had  been  the 
sufferer  and  individuals  and  lumber  corporations  had  been  the 
chief  beneficiaries."  The  law  was  still  defective,  however,  in  that 
it  failed  to  recognize  the  different  classes  of  timber  land  and  per- 
mitted the  purchase  of  such  land  on  time.  In  1883  it  was  pro- 
vided that  one  who  was  a  settler  on  timbered  land  on  January  1, 
1883,  could  purchase  the  same  for  cash  in  quantities  of  not  less 
than  80  acres  and  of  not  more  than  320  acres  at  the  minimum 
price  ($5  per  acre  for  good  timbered  land  and  $2  per  acre  for 


^Land  Office  Report,  1878. 
^Laws  of  1879,  Called  Sess.,  p.  23. 

^Laws  of  1881,  p.  119.     Special  Report  of  the  Commissioner  of  the 
General  Land  Office,  1882,  p.  7. 
^Laws  of  1882,  p.  36. 
^Letter  of  Commissioner  Walsh,  in  the  Galveston  News,  March  1,  1882, 


344  Bulletin  of  the  University  of  Texas 

other  timbered  land).'  Other  purchasers  of  timber  land  were 
required  to  be  settlers,  and  they  were  permitted  to  buy  not  less 
than  160  acres  nor  more  than  640  acres,  at  a  price  of  not  less  than 
$5  an  acre.  But  cash  payment  was  not  required  of  these  pur- 
chasers. It  was  also  provided  in  1883  that  the  timber  could  be 
sold  for  cash  at  $5  an  acre.  Kegarding  the  operation  of  the  legis- 
lation of  1883,  the  commissioner  of  the  general  land  office  wrote 
in  his  report  of  1886  that  the  "pine  lands  remain  practically  tied 
up  under  the  acts  of  1882-3,  which  place  all  timber  land  at  a 
minimum  of  $5  per  acre,  without  regard  to  the  quantity  or  quality 
of  timber.  As  a  result  depredators  are  at  work,  and  legitimate 
timber  cutting  proportionately  checked." 

In  the  reorganization  of  the  administration  and  the  new  land 
legislation  which  occurred  in  1887,  a  classification  of  the  timber 
land  was  authorized,  the  minimum  price  established  for  the  better 
land  was  $5  an  acre  and  that  for  the  poorer  $2  an  acre,^  After 
1887  nothing  of  importance  was  done  affecting  timber  lands  until 
1899,  when  agents  were  authorized  to  investigate  the  theft  of 
timber  on  the  school  lands.  These  agents  and  the  prosecuting 
officials  of  the  state  put  a  stop  to  the  depredations  which  had 
theretofore  gone  on  practically  unchecked.^ 

In  1905  the  present  system  of  selling  the  land  or  the  timber  to 
the  highest  of  competitive  bidders  was  introduced.*  This  com- 
petitive bidding  system  differed  from  former  ones  in  that  its  ad- 
ministration, including  the  fixing  of  minimum  valuations,  was 
left  with  the  commissioner  of  the  general  land  office.  By  1905, 
however,  the  state  had  very  little  timber  land  left.  At  the  close 
of  the  year  1902  there  were  only  31,978  acres  of  timber  lands 
which  were  unsold  and  on  the  market,  and  it  was  doubtful  if  as 
much  as  half  of  this  acreage  had  on  it  timber  of  marketable  value.^ 
The  state's  officers  at  that  time  did  not  know  how  much  of  it  was 
marketable,  and  their  predecessors  also  had  lacked  sufficient 
knowledge  of  the  extent  and  value  of  the  timber  resources  to 


^Laws  of  1S83,  p.  85. 

^Laws  of  1887,  p.  83.     Laws  of  1889,  p.  50. 
^Land  Office  Report,  1901-2,  p.  24. 

^Laws  of  1905,  p.  159.     Laws  of  1907,  Called  Session,  p.  490.     Rev. 
Civil  Stats.,  1911,  arts.  5429-5431. 
''Land  Office  Report,  1903-4,  p.  8. 


A  Financial  History  of  Texas  345 

administer  them  efficiently.  It  was  not  the  fault  of  the  commis- 
sioners of  the  land  office,  but  it  was  due  to  the  niggardly  policy 
of  the  legislatures  and  governors  that  the  timber  resources  were 
parted  with  under  conditions  of  erroneous  or  false  classification 
or  undervaluation  of  the  lands  and  timber.^  The  classification 
and  valuation  of  the  lands  were  entrusted  either  to  county 
officers  or  to  equally  inexpert  outsiders.  The  valuation  of  timber 
lands  or  of  the  timber  thereon  called  for  expert  knowledge,  but 
not  only  was  no  provision  made  for  securing  the  services  of 
experts,  but  there  was  no  appropriation  during  the  greater  part 
of  the  period  that  would  permit  the  commissioner  of  the  general 
land  office  to  inspect  the  forests  or  lands  whose  valuation  he  was 
required  by  law  to  approve  or  disapprove. 

c.     Mineral  Lands  and  Minerals. 

The  mineral  resources  of  Texas  are  varied  and  rich  and  since 
so  much  of  the  land  in  which  minerals  have  been  found  belonged 
at  one  time  to  the  school  fund,  and  since  there  is  left  so  much 
unsold  mineral  land  whose  mineral  rights  have  been  reserved  by 
the  state,  the  history  of  the  disposition  of  these  lands  is  one  of 
interest  and  importance. 

Under  the  laws  of  Spain  and  Mexico  all  mines  belonged  to  the 
sovereign.  The  Republic  of  Texas  by  the  act  of  June  3,  1837, 
provided  against  the  location  of  any  land  grants  on  mineral  land, 
and  in  the  act  of  January  20,  1840,  adopting  the  Common  Law 
and  repealing  certain  Mexican  laws,  the  laws  relating  to  the  re- 
tention by  the  state  of  mines  and  minerals  were  excepted  from 
repeal.  In  the  case  of  Cowan  v.  Hardeman,  decided  in  1862, 
the  supreme  court  upheld  the  right  of  the  state  to  minerals  in 
the  soil.^ 

In  1866  a  change  of  policy  was  adopted  when  by  an  ordinance 
of  the  constitutional  convention  the  state  released  to  the  owner 
of  the  soil  any  minerals  in  the  soil.  This  was  readopted  in  the 
constitutions  of  1869  and  1876.  This  provision  in  the  Constitu- 
tion of  1876  reads:  ''The  State  of  Texas  hereby  releases  to  the 
owner  or  owners  of  the  soil  all  mines  and  minerals  that  may  be 


^Land  Office  Report,  1901-2,  p.  21. 
^26  Tex..  217. 


346  Bulletin  of  the  University  of  Texas 

on  the  same,  subject  to  taxation  as  other  property. '  '^  Thiii  clause 
was  construed  in  1912  to  effect  a  release  of  minerals  in  only  the 
land  with  which  the  state  had  parted  ownership  prior  to  the 
adoption  of  the  Constitution  of  1876.- 

Until  1883  nothing  was  done  by  the  state  in  the  way  of  con- 
serving the  mineral  resources  of  the  state  or  of  promoting  their 
development ;  the  mineral  lands  were  classified  and  valued  only 
as  agricultural  or  grazing  lands,  and  were  disposed  of  under  such 
false  classification.'^  But  in  1883  there  appeared  for  the  first 
time  in  the  land  sale  acts  a  clause  which  reserved  to  the  fund  to 
which  the  land  belonged  the  minerals  which  were  found  in  such 
lands."*  The  act  of  1883  did  not  provide  for  the  sale  of  mineral 
lands  as  such  but  provided  only  for  the  sale  of  the  minerals.^  It 
was  enacted  that  the  fund  to  which  the  land  belonged  should 
receive  a  royalty  of  five  per  cent  of  the  gross  receipts  from  the 
operation  of  the  mine.  Only  $12.25  was  received  from  this 
royalty  up  to  the  year  1887.^ 

The  law  of  1883  was  thus  practically  inoperative,  and  the 
whole  situation  with  respect  to  the  mineral  lands  was  badly  in 
need  of  change.  Prospectors  felt  insecure  as  against  the  owners 
of  the  land  so  long  as  the  release  clause  of  the  constitution  was 
unconstrued;  there  was  need  of  a  mineral  survey  of  the  public 
lands  in  order  that  the  mineral  lands  might  be  known  and  classir 
fed  as  such,  and  need  of  a  provision  either  for  their  sale  or  for 
their  withdrawal  from  the  market.' 

The  administration  of  the  mineral  lands  during  the  years 
1883-1895  was  especially  full  of  blunders.  In  1887  a  new  land 
sale  act  was  passed  and  the  Land  Board  which  had  been  estab- 
lished in  1883  was  abolished,  but  the  omission  in  the  act  of  any 
reference  to  mineral  lands  had  the  effect  of  repealing  the  min- 
eral land  legislation  of  1883.^     The  state  was  left  thereby  with- 


'Art.  14,  sec.  7. 

=Cox  V.  Robinson,  105  Tex.,  438   (1912). 

"Land  Office  Report,  1881-2,  p.  6. 

'Laws  of  1883,  p.  85. 

^■Laws  of  1883,  p.  100. 

*^^Report  of  the  State  Land  Board,  1886,  p.  6. 

'Land  Office  Report,  1888,  p.  9. 

*Heil  V.  Martin,  70  S.  W.  Rep.,  430  (1902). 


A  Financial  History  of  Texas  347 

out  any  express  provision  for  the  reservation  or  protect io  a  of 
the  mineral  lands  or  of  the  minerals  in  them.^ 

Under  the  law  of  1883  the  classification  and  sale  of  mineral 
lands  were  not  provided  for,  but  the  retention  of  these  lands  by 
the  state  and  their  operation  by  private  persons  upon  the  pay- 
ment of  a  royalty  to  the  state  was  the  policy  adopted.  The  pol- 
icy which  had  been  followed  up  to  1883  had  been  to  withhold 
known  mineral  lands  from  sale  and  to  make  no  provision  for  the 
sale  of  the  minerals.  In  1889  provision  was  made  for  the  sale 
of  mineral  lands  as  such.-  Mining  claims  on  lands  containing 
gold,  silver,  cinnabar,  lead,  tin,  copper  or  other  valuable  min- 
erals were  limited  to  twenty-one  acres,  and  the  purchase  price 
of  the  land  was  fixed  at  $25  an  acre.  Mining  claims  on  lands 
containing  coal,  iron  ore,  oil,  natural  gas,  fine  clay,  marble,  or 
other  deposits  were  limited  to  oAe  hundred  and  sixty  acces  for 
individuals  and  to  six  hundred  and  forty  acres  for  associations 
which  had  expended  as  much  as  $5,000  in  developing  the  claim, 
and  the  purchase  price  of  the  land  was  fixed  at  $10  and  $20 
an  acre  according  as  it  was  or  was  not  situated  within  ten  miles 
of  a  railroad.  Purchasers  of  mineral  lands  were  given  five  years, 
within  which  to  pay  for  them.  In  1888  a  geological  and  min- 
eralogical  survey  of  the  state  was  authorized,  and  it  was  ex- 
pected that  this  survey  would  enable  the  state  to  classify  the 
mineral  lands;  but  the  work  of  the  survey  was  incomplete  and 
lands  which  were  really  mineral  lands  continued  to  be  classified 
as  grazing  land  and  sold  at  $1.00  and  $1.50  an  acre.^ 

In  1895  a  new  mining  law  was  passed.*  Some  of  the  changes 
made  by  it  were  that  the  prices  of  the  land  containing  the  less 
.valuable  metals  were  fixed  at  $10  and  $15  instead  of  $10  and 
$20,  and  that  ten  years  credit  with  interest  at  4  per  cent  was 
allowed  to  purchasers  of  such  lands. 

Under  the  credit  provisions  of  the  laws  of  1889  and  1895 
there  were  easy  opportunities  for  the  exploitation  of  a  claim 
without  adequate  payment,  and  valuable  deposits  were  worked 


^Mining  Co.  v.  Rogan,  68  S.  W.  Rep.,  155  (1902). 

==Laws  of  1889,  p.  116. 

'Laws  of  1888,  p.  10.     Land  Office  Report,  1899-1900,  p.  28. 

*Laws  of  1895,  p.  197. 


348  Bulletin  of  the  University  of  Texas 

in  El  Paso,  Presidio  and  Brewster  counties  without  any  pay- 
ment to  the  school  fund/  With  a  view  to  correcting  the  de- 
ficiencies due  to  imperfect  classification  of  the  public  lands,  min- 
eral surveys  were  authorized  in  1901  and  1903,  but  like  the  sur- 
very  of  1888,  their  work  was  stopped  before  it  was  completed, 
and  the  school  fund  has  apparently  never  been  the  beneficiary 
of  any  of  the  work  of  the  several  surveys.  The  loose  and  care- 
less policy  respecting  classification  and  sale  explains  why  the 
receipts  to  the  school  fund  from  the  sale  of  mineral  lands  be- 
tween 1883  and  1905  were  only  $17,972.2 

Amendments  were  made  to  land  laws  in  1905,  the  most  im- 
portant one  being  that  the  commissioner  of  the  general  land 
office  should  set  the  price  upon  the  land,  subject  to  a  minimum 
of  $25  per  acre.^  Other  important  changes  made  were  on  ac- 
count* of  defects  in  the  act  of  lB95  and  were  that  one-fifth  of  the 
purchase  price  of  the  lands  containing  valuable  minerals  together 
with  interest  on  the  unpaid  installments  should  be  paid  annually, 
and  that  one  interested  in  a  forfeited  claim  should  not  be  eligible 
to  relocate  or  have  any  interest  in  a  relocation. 

In  1907  a  very  important  change  in  the  law  was  made  when 
it  was  provided  that  land  classed  as  mineral  could  be  sold  for 
agricultural  or  grazing  purposes,  but  upon  the  express  condi- 
tion that  the  minerals  were  reserved  to  the  fund  to  which  the 
land  belonged.*  The  significance  of  this  provision  for  blanket 
classification  can  be  best  understood  in  the  light  of  the  history 
of  certain  portions  of  the  different  acts  from  1883  to  1907.  All 
of  the  acts  reserved  to  the  fund  to  which  the  land  belonged 
the  minerals  in  the  land,  and  the  acts  from  1889  on  reserved 
from  sale  or  other  disposition  except  as  mineral  lands  all  lands 
containing  minerals,  and  a  person  in  applying  to  purchase  any 
land  was  required  to  certify  that  to  the  best  of  his  belief  there 
were  no  minerals  in  the  land. 

The  reservation  clause  in  the  act  of  1889,  as  well  as  that  in 
the  act  of  1883,  was  nullified  by  the  Revised  Statutes  of  1895 

^Land  Office  Report,  1901-2,  p.  42;  1903-4,  p.  10. 

=Land  Office  Report,  1903-4. 

*Laws  of  1905,  p.  148. 

*Laws  of  1907,  First  Called  Sess.,  p.  495. 


A  Firmncial  History  of  Texas  349 

which  in  article  4041  released  to  the  owner  or  owners  of  the 
land  the  minerals  in  the  land/  Though  by  this  article  the  state 
released  its  mineral  rights  in  land  parted  with  prior  to  the 
adopt i'on  of  the  Revised  Statutes  of  1895,  by  article  3495  of  the 
same  statutes  there  were  reserved  the  minerals  in  lands  dis- 
posed of  after  the  adoption  of  the  Revised  Statutes. 

The  state  contended  in  the  case  of  Schendell  v.  Rogan  that 
the  reservation  clause  reserved  the  minerals  not  only  in  lands 
classified  as  mineral  lands,  but  also  in  lands  classified  and  sold 
as  agricultural,  grazing,  or  timbered.  The  decision  of  the  court, 
however,  was  that  when  land  had  been  classified  and  sold  by 
the  commissioner  of  the  general  land  office  as  agricultural  or 
grazing  land,  even  though  it  contained  minerals,  the  action  of 
the  commissioner  was  conclusive  upon  the  state.^  Since,  there- 
fore, in  order  for  the  reservation  clause  to  be  effective  the  land 
must  be  classified  as  mineral,  the  provisions  in  the  law  of  1907 
for  a  double  classification  and  for  a  reservation  of  the  minerals 
make  it  possible  to  dispose  of  the  land  without  impairing  the 
right  of  the  state  to  the  minerals  in  it. 

Despite  more  than  seventy-five  years  of  ownership  and  man- 
agement of  the  public  lands,  the  state  in  1912  had  a  most  un- 
satisfactory mineral  land  law  on  the  statute  books.  The  com- 
missioner of  the  general  land  office  wrote  regarding  the  situation 
that  valuation  of  mineral  lands  was  ''simply  guess  work,  and 
purely  arbitrary.  A  precious  mineral  location  might  be  rich  in 
ore  and  the  owner  extract  large  quantities  in  a  short  while,  ex- 
haust the  deposit  and  abandon  it  in  a  year  or  so  without  liability 
in  excess  of  the  nominally  appraised  value.  As  yet  few  have 
found  mining  on  school  land  profitable.  In  the  case  of  the  baser 
minerals,  such  as  oil,  coal,  etc.,  the  average  prospector  does  not 
prospect,  but  waits  for  his  neighbor  to  develop.  He  is  likewise 
slow  to  do  much  real  prospecting  before  buying  (the  land),  lest 
something  should  be  found,  and  the  price  fixed  proportionately."^ 

The  imperfections  of  the  law  of  1907  for  promoting  mining 
development  and  the  need  of  some   provision  for  the  sale  of 

^Heil  V.  Martin,  70  S.  W.  Rep.,  430  (1902). 

-94  Tex.,  585  (1901). 

'Land  Office  Report,  1911-12,  p.  13. 


350  Bulletin  of  the  University  of  Texas 

minerals  found  on  land  which  had  been  sold  but  the  mineral 
rights  to  which  had  been  reserved  to  the  state  led  to  the  legisla- 
tion of  1913/  The  law  of  1913  provides  that  the  prospector  for 
oil  or  gas  shall  take  out  a  permit,  the  possession  of  which  gives 
him  the  exclusive  right  for  a  certain  period  of  prospecting  on 
the  land.  In  the  event  of  the  discovery  of  oil  or  gas  in  com- 
mercial quantities,  the  owner  of  the  permit  has  the  right  to 
lease  the  land  and  operate  the  well  or  wells  upon  payment  of  $2 
per  acre  per  annum  in  advance  and  of  a  royalty  annually  of  one- 
eighth  of  the  value  of  the  gross  production  of  the  oil  or  of  10 
per  cent  of  the  meter  output  of  the  gas  sold.  In  the  case  of  land 
which  has  been  sold  by  the  state  with  a  reservation  of  the  min- 
erals, the  annual  charge  to  the  prospector  for  the  permit  to  pros- 
pect for  oil  or  gas,  amounting  to  twenty-cents  an  acre,  accrues 
to  the  owner  of  the  land.  There  are  no  similar  permit  fees  for 
prospecting  for  other  minerals  and  no  absolute  lease  charge  per 
acre  in  addition  to  the  royalty.  The  royalty  payable  in  the 
case  of  coal  is  six  cents  a  ton ;  for  lignite,  four  cents  a  ton ;  and 
for  other  minerals,  stones,  etc.,  five  per  cent  of  the  value  of  the 
gross  output. 

d.     Summary. 

The  advertising  and. bidding  methods  introduced  in  1905  re- 
sulted in  an  estimated  gain  of  $20,783,882  to  the  school  fund 
during  the  seven  years  1906-1912  over  the  old  methods  of  sale.^ 
Some  land  which  would  have  sold  at  from  $1  to  $2  per  acre 
under  the  old  system  sold  under  the  new  at  from  $12  to  $22  per 
acre.  However,  the  average  sale  price  of  the  western  lands  per 
acre  was  low — between  $1.50  and  $3.00 — because  these  lands  were 
suitable  only  for  dry  farming  or  for  grazing. 

The  first  school  land  sales  were  under  the  act  of  1858,  as 
amended  in  1860^  and  amounted  to  10,506  acres.  The  next  land 
sale  act  was  in  1874,  and  under  it  sales  totaling  317,107  acres 
were  made.  Under  the  acts  of  1879  and  1881  6,596,069  acres 
were  sold.     Up  to  1883,  therefore,  the  number  of  acres  sold 

^Rev.  Civil   Stats.,    1911,   arts.   5433,   5904-5922.     Laws    of   1913,   Reg. 
Sess.,  p.  409.     Laws  of  1913,  Called  Sess.,  p.  26. 
^Land  Office  reports,  1906-1912. 


A  Financial  History  of  Texas  351 

amounted  to  only  6,923,682.  Under  the  acts  of  1883,  1887,  1895 
and  1910  and  their  amendments  there  were  sold  up  to  September 
1,  1900,  21,778,395  acres.  On  account,  however,  of  forfeitures 
and  cancelations  amounting-  to  10,256,714  acres,  the  total  acre- 
age either  patented  or  whose  sales  were  in  good  standing  at 
the  land  office  in  1900  under  all  the  acts  was  18,444,975.^  As 
the  amount  of  the  land  unsold  in  1900  was  20,613,527  acres,  this 
added  to  the  18,444,975  acres  gives  39,058,502  as  the  land  en- 
dowment of  the  school  fund  up  to  1900.  More  than  five  million 
acres  were  added  as  a  result  of  the  settlement  between  the  state 
and  the  school  fund  under  the  terms  of  the  act  of  1900,  so  that 
the  school  fund  received  in  land  approximately  45,000,000  acres. 
There  remained  in  1912  only  1,636,176  acres.  The  purchase 
movement  after  1900  was  very  heavy,  the  amount  sold  being 
nearly  as  much  as  that  for  the  entire  period  1858-1900.-  The 
unsold  land  lies  between  the  Pecos  and  Rio  Grande  rivers;  it 
is  classified  mainly  as  mineral-grazing  land,  and  because  of  its 
extreme  aridity  some  of  it  is  not  suitable  even  for  grazing.  Only 
377,018  acres  were  under  lease  in  1912.  A  small  revenue  is  de- 
rived from  the  sale  of  guayule  and  candalilla  growing  on  these 
western  lands,  these  shrubs  having  a  commercial  value  in  the 
manufacture  of  products  possessing  the  qualities  of  rubber 
and  wax. 

An  idea  of  the  financial  significance  of  the  lands  to  the  school 
fund  may  be  derived  from  an  examination  of  some  of  the  items 
of  the  permanent  school  fund.  On  August  31,  1914,  this  fund 
owned  $18,204,363  of  state,  county,  and  other  bonds  of  value, 
and  $35,028  in  cash,  and  approximately  all  of  this  amount  was 
derived  from  land  sales.  The  fund  held  also  the  notes  of  pur- 
chasers of  land  for  $47,067,427,  and  the  interest  on  these  notes 
during  1914  amounted  to  $1,409,491.  The  receipts  from  leases 
in  1914  were  only  $1,388.^ 


^Land  Office  Report,  1899-1900. 

==There  were  put  on  the  market  in  1914,  3,769,281  acres  of  school 
lands.  This  is  the  sum  of  the  amount  unsold  in  1912  plus  the  for- 
feitures since  1912, 

^Report  of  the  State  Treasurer.  1914,  pp.  35-36. 


352  Bulletin  of  the  University  of  Texas 

C.     University  Lands. 

Until  1895  the  university  lands  were  administered  by  the 
general  land  office,  and  their  administration  was  characterized 
by  the  merits  and  shortcomings  of  the  public  land  legislation 
and  administration  up  to  that  time.  The  regents  of  the  Uni- 
versity recommended  as  early  as  1886  that  they  should  be  given 
the  control  and  management  of  the  lands  belonging  to  the  Uni- 
versity, but  this  was  not  done  until  1895.^ 

The  fifty  leagues  of  land  granted  to  the  University  in  1839 
were  surveyed  to  the  amount  of  226,122  acres  in  Callahan,  Col- 
lins, Cooke,  Fannin,  Grayson,  Hunt,  Lamar,  McLennan  and 
Shackelford  counties.  There  were  conflicts  of  surveys  in  the 
ease  of  21,762  acres  of  these  lands,  and  the  University  lost  there- 
by over  7,022  acres  in  McLennan  County  and  8,022  acres  in 
Grayson  County,  and  the  loss  in  the  latter  case  has  not  been 
made  good  by  the  state. ^  Sales  of  the  land  received  from  this 
grant  began  before  the  Civil  War,  and  by  1888  there  were  only 
14,148  acres  unsold.^  By  1899  only  5,095  acres  were  unsold,  and 
it  was  believed  that  the  title  had  been  lost  to  most  of  these.* 

The  western  lands,  or  those  surveyed  for  the  University  under 
the  acts  of  1879  and  1883,  are  situated  in  the  western  and  south- 
western parts  of  the  state.  On  account  of  their  quality  and  the 
deficiency  in  rainfall,  they  are  fit  only  for  grazing.  Of  the  more 
than  two  million  acres  of  the  western  lands  of  the  University 
only  one  sale  of  640  acres  has  ever  been  perfected.  It  has  been 
the  policy  of  the  board  of  regents  not  to  sell  the  western  lands 
but  to  lease  them  for  grazing  purposes  until  they  are  more  valu- 
able. The  greatest  number  of  acres  under  lease  before  1895  was 
685,280  in  1892.  By  1898,  as  a  result  mainly  of  the  efforts  of  the 
land  agent  of  the  University,  the  number  of  acres  under  lease  rose 
to  1,384,632,  and  the  annual  rental  amounted  to  $40,408,  as  com- 
pared with  $17,186  in  1892-3.  On  August  31,  1915,  there  were 
2,067,105  acres  vinder  lease  at  from  two  and  a  half  to  fifteen 


^Report  of  the  Board  of  Regents,  1886,  p.  22.  Laws  of  1895,  p.  19. 
Rev.  Civil  Stats.,   1911,  arts.   2633-2634. 

-Report  of  the  Board  of  Regents,  1888,  p.  6;  1892,  p.  7.  Lane, 
History  of  Education  in  Texas,  p.  138.     Laws  of  1897,  p.  265. 

^Report  of  the  Board  of  Regents,  1888,  p.  6. 

'Report  of  the  Board  of  Regent*?,  1899,  p.  42. 


A  Financial  History  of  Texas  353 

cents  an  acre,  and  the  amount  received  from  leases  during  1915 
was  $169,057.  Also  on  August  31,  1915,  the  permanent  uni- 
versity fund  held  land  notes  to  the  amount  of  $26,572.77,  and 
the  annual  interest  on  the  notes  amounted  to  $1,135.16/ 

It  can  never  cease  to  be  a  source  of  regret  to  the  friends  of 
higher  education  in  Texas  that  the  framers  of  the  Constitution 
of  1876  took  away  from  the  University  the  land  appropriation 
made  in  1858  and  substituted  therefor  one  million  acres  of  west- 
ern lands.  The  grant  made  in  1858  of  one  section  for  every  ten 
granted  to  railroads  would  have  been  a  princely  endowment,, 
and  would  have  amounted,  it  has  been  estimated,  to  not  less  than 
1,600,000  acres  in  1886,  worth  at  least  $8,000,000.^  The  present 
western  land  endowment  of  over  2,000,000  acres  is  worth  as 
grazing  land  not  more  than  $3,000,000.^ 

D.     Asijlnm  Lands. 

The  asylum  lands^  granted  by  the  act  of  1856,  were  surveyed 
in  Callahan,  Comanche,  Eastland,  Jones,  Shackelford,  Stephens, 
Taylor,  and  Tom  Green  counties.*  Instead  of  there  being  100,- 
000  acres  surveyed  for  each  of  the  asylums,  there  appears  to 
have  been  surveyed  for  the  Blind  Asylum,  104,457  acres;  for 
the  Deaf  and  Dumb  Asylum,  102,259  acres;  for  the  Orphan 
Asylum,  102,359  acres;  for  the  Lunatic  Asylum,  101,618  acres.^ 
The  asylum  lands  are  under  the  administration  of  the  general 
land  office  and  the  history  of  their  disposition  is  similar  to  that 
of  the  school  lands.  On  August  31,  1902,  only  4,846  acres  of 
the  asylum  lands  were  unsold,  and  on  August  31,  1912,  all  ap- 
pear to  have  been  sold,  though  the  several  asylum  funds  held 
notes  for  $172,199   for  122,578   acres  sold  and  not  paid  out.« 


^MSS.  Report  of  the  auditor  of  the  University. 

^Report  of  the  Board  of  Regents,  1886,  p.  7.  J.  J.  Lane,  History  of 
Education  in  Texas,  p.  143. 

^The  value  of  these  lands  is  placed  at  $1,346,971  in  the  balance  sheet 
of  the  University  in  1912;  Report  of  the  Board  of  Regents,  1910- 
1912,  p.  107. 

*Land  Office  Report,  1878,  p.  19. 

^Land  Office  Report,  1901-2,  p.  38. 

''The  amount  of  land  notes  held  by  the  several  asylum  funds  on 
August  31,  1914,  was  $158,661;  Report  of  the  State  Treasurer,  1914^ 
pp.  36-37. 

23— H 


"354  Bulletin  of  the  Universitij  of  Texas 

E.     Conclusion. 

Since  1880  there  has  taken  place  not  only  the  complete  ap- 
propriation of  the  free  public  domain  bnt  also  the  disposal  by 
sale  of  the  easily  cultivable  school,  university,  and  asylum  lands. 
On  Au^st  31,  1880,  the  unsold  land  belono^inor  to  the  special 
funds,  including  the  capitol  lands,  amounted  to  29,528,150  acres, 
and  the  amount  of  free  land  belono^ing^  to  the  state  was  estimated 
at  19,069,890,  makino-  a  total  of  48,598,040  acres  to  be  disposed 
of.  As  there  were  no  free  public  lands  in  1912  and  as  the  amount 
unsold  belonging:  to  the  special  funds  was  about  four  million 
acres,  nearly  forty-five  million  acres  had  been  parted  with  by 
the  state  and  the  special  funds  since  1880.  Not  all  of  New  Eng- 
land and  Delaware  together  equal  in  land  area  the  amount  of 
land  parted  with.  Though  the  best  lands  for  cultivation  are 
gone,  Texas  has  a  coast  line  of  some  four  hundred  miles,  and 
lying  along  it  are  many  acres  of  unsurveyed  and  undrained  land 
which  belong  to  the  state.  Drainage  of  these  lands  and  the  re- 
clamation and  mining  of  the  western  lands  may  make  the  re- 
maining public  lands  valuable  and  useful. 


Chapter  11 


THE  PUBLIC  DEBT. 


The  four  things  which  stand  out  prominently  in  the  history 
of  the  public  debt  since  1880  are  the  reduction  in  the  amount 
of  the  debt,  the  refunding  operations,  the  acquirement  of  the 
bonded  debt  by  the  school  and  other  special  funds,  and  frequent 
deficiencies  in  the  general  revenue  resulting  in  harassing  float- 
ing debts. 

The  bonded  debt,  exclusive  of  'Hhe  debt  of  doubtful  valid- 
ity" held  by  the  school  and  university  funds,  was  reduced  from 
$5,029,920  in  1880  to  $3,976,200  in  1915,  making  a  reduction 
of  $1,053,720.  If  "the  debt  of  doubtful  validity"  be  included, 
the  reduction  for  the  period  amounted  to  $1,892,066.  The  pay- 
ments made  in  1881,  1882  and  1883  amounted  to  $1,680,244.  The 
so-called  debt  of  doubtful  validity  consisted  of  the  five  per  cent 
bonds  issued  to  the  school  and  university  funds  under  authority 
of  the  act  of  November  12,  1866,  the  six  per  cent  bonds  issued 
to  the  school  fund  in  1865,  and  a  comptroller's  certificate  of 
indebtedness  issued  to  the  university  fund  in  1865.  All  of  these 
obligations  were  validated  in  respect  to  both  principal  and 
accrued  interest  and  w^ere  ordered  paid  by  the  act  of  February 
23,  1883.^  The  principal  and  accrued  interest  of  these  old  debts 
amounted  to  $738,346.  $688,054  of  the  amount  was  paid  in 
1883.  but  on  account  of  insufficient  means  the  remainder  was 
not  paid  ufitil  1885.  Payments  of  the  public  debt  which  have 
been  made  since  1885  were  $243,000  in  1892,  $2,700  in  1893, 
$2,585  in  1899,  $45  in  1900,  $11,900  in  1910,  and  $1,300  in  1911— 
a  total  since  1885  of  $261,530.  The  debt  paid  during  these  years 
was  that  held  mainly  by  individuals  and  not  that  held  by  the 
trust  funds  of  the  treasury. 

In  1909,  as  a  result  of  the  penalty  of  $1,718,009  paid  to  the 
state  by  the  Waters-Pierce  Oil  Company,  the  legislature  ap- 
propriated $1,068,900  to  pay  the  state  debt  maturing  in  1909. 
This  debt  consisted  of  the  5%  thirty  year  bonds  issued  in  1879, 


'Laws  of  1883,  p.  15. 


356  Bulletin  of  the  University  of  Texas 

and  the  trust  funds  held  $933,500  of  the  amount.  The  appro- 
priation was  vetoed,  however.  The  reasons  for  the  veto  given 
by  the  governor  were,  first,  that  the  method  of  debt  payment 
required  by  the  constitution  (art.  3,  sec.  48)  was  through  the 
accumulation  of  a  two  per  cent  sinking  fund ;  and,  second,  that 
granting  constitutionality,  payment  as  contemplated  would  lay 
in  one  year  a  too  heavy  burden  of  taxation  upon  the  people.^ 
The  constitution  not  only  does  not  enjoin  the  method  of  pay- 
ment by  a  sinking  fund,  but  the  history  of  debt  payment  sub- 
sequent to  1876  does  not  support  the  first  ground  for  the  veto. 
The  large  payments  made  in  the  early  eighties  were  mainly 
out  of  the  proceeds  of  land  sales  under  the  ''Fifty  Cents  Law," 
and  out  of  the  general  revenue  fund.-  A  sinking  fund  was 
provided  for  in  1879,  to  which  there  was  transferred  from  the 
general  revenue  fund  $100,000  in  1880,  $150,000  in  1881,  and 
$100,000  in  1882,  or  a  total  of  $350,000,  out  of  which  disburse- 
ments were  made  through  1883  of  $346,639.73.^  Contrasted 
with  this  amount  paid  through  the  agency  of  a  sinking  fund 
are  $740,589.90  paid  out  of  the  proceeds  from  land  sales  under 
the  act  of  July  14,  1879,  $192,664.62  out  of  the  general  revenue 
in  1881,  and  $852,424.79  out  of  the  general  revenue  in  1882. 
The  total  payments  on  the  funded  debt  out  of  the  sinking  fund, 
the  land  sales  act,  and  the  general  revenue  amounted  during 
the  three  years  1881-1883  to  $2,132,379.  The  difference  between 
this  amount  and  $1,680,244,  which  was  the  amount  of  debt  paid, 
is  $452,135,  and  this  difference  represents  premiums  and  com- 
missions paid  by  the  state. 

The  debt  paid  in  the  early  eighties  was  the  6%  and  7%  bonds 
maturing  in  1892,  1904,  1909,  and  1910.  All  of  these  bonds 
commanded  a  very  high  premium  in  the  market.  The  7%  bonds 
due  in  1904  were  bought  at  a  premium  of  $40  on  the  $100 ;  the 
7's  redeemable  at  the  pleasure  of  the  state  in  1890  brought  a 
premium  of  $30  and  $31 ;  the  6's  due  in  1892  brought  a  premium 


^Laws  of  1909,  p.  536. 

^Laws  of  1881,  p.  51. 

'In  the  Report  of  the  Comptroller,  1879-1880,  the  general  revenue 
gives  $200,000  as  the  amount  transferred  to  the  sinking  fund,  but  the 
latter  fund  gives  only  $100,000  as  the  amount  received.  The  latter 
figure  appears  to  be  the  correct  one. 


A  Financial  History  of  Texas  357 

of  $25;  and  the  5's  due  in  1909  were  bought  at  a  premium  of 
$14  and  $15.^  In  spite  of  the  high  premium  paid,  the  gain  to 
the  state  through  interest  saved  was  considerable.-  At  the 
same  time  the  premiums  were  more  than  they  should  have  been. 
Their  height  was  due  partly  to  the  attractiveness  to  private 
investors  of  the  interest  rates  which  the  bonds  bore,  but  more 
especially  to  the  unnecessary  competition  between  the  state  to 
secure  the  bonds  for  payment  and  the  school  fund  and  the 
counties  to  secure  the  bonds  as  investments.  Until  1884  the 
permanent  school  fund  was  restricted  by  the  constitution  in 
its  investments  to  United  States  and  State  of  Texas  bonds  only, 
and  the  large  amount  of  proceeds  accruing  to  the  fund  from 
sales  of  land  at  a  time  when  both  the  Federal  and  the  state 
governments  were  engaged  in  debt  reduction  worked  a  hard- 
ship upon  the  fund  and  made  the  cost  of  debt  payment  use- 
lessly dear  to  the  state.^  In  1883  a  constitutional  amendment 
was  adopted  which  permitted  the  investment  of  the  permanent 
school  fund  in  county  bonds,  and  this  permission  became  statute 
law  in  1884.* 

The  trust,  or  special,  funds  in  the  treasury,  consisting  of  the 
permanent  school  fund,  the  permanent  university  fund,  the 
Agricultural  and  Mechanical  College  fund,  and  the  several 
asylum  funds,  have  come  to  hold  since  1880  the  entire  bonded 
debt  of  the  state.  In  1880.  34.45%  was  held  by  them;  in  1890, 
71%  ;  in  1900,  81.99%  ;  and  in  1911,  100%. 

The  policy  of  the  state's  trust  funds  to  hold  the  bonded  debt 
has  made  possible  the  refunding  of  the  state  debt  on  practically 
a  three  per  cent  basis.  In  1891  $201,000  of  the  7%  "frontier 
defense"  bonds  of  1870  held  by  individuals  were  refunded  into 


^House  Journal,  17th  Leg.,  Called  Sess.,  p.  112.  The  Commercial  and 
Financial  Chronicle,  vol.   34,   p.   379,  and  vols.   32-39  passirji. 

Hn  the  case  of  the  7's  which  were  not  payable  until  1904,  the  interest 
on  a  one  hundred  dollar  bond  from  1882  was  $154,  and  the  $40  premium 
deducted  leaves  a  net  gain    of  $114. 

«The  Galveston  News,  April  10,  1881;  April  6,  12,  June  27,  July  1, 
November  19,  and  December  14,  1882.  Report  of  the  Comptroller, 
1881-1882,  and  1884.  Message  of  Governor  Roberts,  January  10,  1883. 
House  Journal,  18th  Leg.,  p.  10. 

*Laws  of  1883,  p.  131.     Laws  of  1884,  p.  38. 


358  Bulletin  of  the  University  of  Texas 

5%  bonds;  in  1893  $486,500  of  the  6's  and  7's  maturing  in 
1890  and  1891  and  held  by  the  trust  funds  were  refunded  into 
4%  and  %  bonds;  in  1903  $288,000  of  7's  held  by  the  trust 
funds  were  refunded  into  3's;  in  1905  $1,647,000  of  6's  held 
by  the  trust  funds  were  refunded  into  3's,  and  in  1910  $1,353,- 
700  5's  and  7's  held  by  the  trust  funds  were  refunded  into  3's. 
In  1880  43.4%  of  the  debt  bore  7%  interest;  34.2%,  6%  ;  22.2%, 
5%; ;  and  only  one-ninth  of  one  per  cent  bore  as  low  as  4% 
interest.  In  1912  82.7%  bore  3%  interest;  8.4%o  bore  4%  ;  and 
8.8%  bore  5%  interest.  The  annual  interest  charge  has  as  a 
result  of  debt  payment  and  refunding  decreased  from  $312,389 
in  1880  to  $129,691  in  1915. 

There  has  been  no  increase  in  the  bonded  debt  of  the  state 
since  1879  except  in  1885,  when  a  deficit  in  the  general  revenue 
led  to  the  issue  of  $200,000  of  state  bonds.^  Not  classified  by 
the  comptroller  as  a  part  of  the  public  debt  of  the  state,  how- 
ever, is  the  bonded  debt  of  the  prison  system,  and  for  the 
reason  that  the  bonds  are  not  a  charge  upon  the  general  reve- 
nues of  the  state  but  upon  the  revenues  of  the  prison  system. 
As  the  prison  system  is  a  part  of  the  state  government,  its 
debts  are  really  state  debts,  and  certainly  no  account  of  the 
public  debt  should  omit  mention  of  them.  The  prison  system 
is  the  only  division  of  the  state  government  which  has  been 
authorized  by  the  legislature  to  issue  bonds  or  which  has  been 
permitted  to  incur  at  will  a  floating  indebtedness.  The  indus- 
trial activities  of  the  system  has  made  necessary  an  extensive 
use  of  its  credit.  On  December  31, 1911,  there  were  outstanding 
against  the  railroad,  which  was  a  part  of  the  prison  system, 
$100,000  of  5%  bonds.  These  were  called  Texas  State  Railroad 
bonds  and  were  held  by  the  permanent  school  fund.^  In  1913 
the  prison  commission  was  authorized  to  issue  bonds  to  the 


^An  issue  of  bonds  for  deficiency  purposes  was  authorized  in  1889, 
but  the  issue  did  not  have  to  be  made.     Laws  of  1889,  p.  81. 

-Message  of  Governor  Colquitt  on  Prison  Affairs,  January  30,  1913. 
Laws  of  1913,  p.  65.  The  amount  originally  issued  and  purchased  by 
the  permanent  school  fund  in  1908  was  $150,000.  These  were  redeemed 
in  1909,  and  an  issue  of  $200,000  was  purchased  by  the  fund.  On 
August  81,  1914,  the  fund  held  $100,000  of  the  bonds. 


A  Financial  History  of  Texas  359 

amount  of  two  million  dollars  ($2,000,000)  to  pay  its  debts^ 
erect  buildings,  equip  factories,  and  the  like.^ 

A  constitutional  amendment  was  voted  upon  by  the  people 
and  defeated  in  1913  which  proposed  to  empower  the  legislature 
to  authorize  the  issue  of  bonds  for  the  purpose  of  purchasing 
additional  ground  and  of  erecting  buildings  for  the  University 
of  Texas  and  for  the  purpose  of  erecting  buildings  for  the 
different  state  institutions.-  The  proposed  amendment  provided 
that  the  income  of  the  permanent  university  fund  should  be 
available  to  meet  the  interest  on,  and  provide  a  sinking  fund 
for,  the  university  bonds. 

Deficiencies  in  the  general  revenue  have  led  to  a  floating  debt 
in  the  form  of  warrants  outstanding  at  the  close  of  the  fiscal 
years  1894,  1895,  1904,  1905,  1906,  and  1913.  The  amounts  were 
as  follows: 

.    1894 $452,313 

1895  760,121  ^ 

1904 815,168 

1905 721,250  ; 

1906 348,956-.      .   J 

1913 242,529' 

Deficiencies  at  other  times  than  at  the  close  of  the  fiscal  year 
appeared  in  other  years. ^ 

The  prison  system  has  had  a  floating  indebtedness  throughout 
its  history,  but  there  are  no  records  of  its  true  amounts.  The 
indebtedness  of  the  system  on  account  of  losses  by  fire  and 
freezes,  railroad  losses,  increased  operating  costs  and  the  like 
was  $1,528,458  on  January  1,  1913.^ 

Treasury  deficiencies  have  been  accepted  with  entire  equa- 
nimity by  the  legislature  and  the  people  of  the  state,  despite 
the  fact  that  they  are  in  the  end  costly  to  the  state  and  work 
a  hardship  upon  its  creditors.    The  creditors  of  the  state  have 

^Laws  of  1913,  p.  110. 

=Laws  of  1913,  p.  457. 

^1886,  1896,  and  1914  are  some  of  the  years  in  which  such  deficiencies 
have  occurred. 

^Report  and  Findings  on  the  Penitentiary  Investigating  Committee,, 
July  24,  1913,  p.  1. 


360  Bulletin  of  the  Vniversity  of  Texas 

usually  been  forced  by  reason  of  their  financial  circumstances 
to  have  their  warrants  discounted,  and  the  discount  and  the 
loss  of  the  use  of  their  money  suffered  by  the  creditors  are 
losses  which  are  to  the  discredit  of  the  state.  A  state  which 
permits  losses  of  this  character  to  recur  again  and  again  is 
either  ignorant  or  dishonest,  or  both.  The  most  obvious  method 
of  preventing  loss  to  creditors  would  be  to  have  all  warrants 
bear  a  good  rate  of  interest  until  they  were  called  for  payment. 
This  was  done  in  1860  and  1874  and  would  seem  therefore  to 
be  constitutional;  but  if  it  is  not  constitutional,  it  should  be 
made  so.  Another  method  of  caring  for  deficiencies  in  the 
general  revenue  is  to  sell  short  time  deficiency  bonds.  Unless 
they  could  be  sold  in  anticipation  of  a  deficiency,  this  method 
should  be  supplemented  by  the  preceding  method.  The  present 
constitution  limits  the  debt  which  may  be  created  to  pay  de- 
ficiencies to  $200,000.  This  is  wholly  inadequate.  A  consti- 
tutional amendment  to  raise  this  limit  to  $500,000  was  defeated 
in  1913.  It*  is  perhaps  well  that  it  was  defeated,  because  the 
amount  would  have  been  insufficient;  it  would  not  have  been 
sufficient,  at  least,  for  the  deficiency  in  1913-1914.  Another 
method  of  handling  deficiencies  in  the  current  revenues  is  for 
the  treasury  to  have  a  large  working  balance.  This  is  the  least 
desirable  method,  since  it  would  require  the  state  to  raise  a 
larger  amount  of  revenue  by  taxation  than  it  would  ordinarily 
have  use  for  and  would  constitute  a  constant  temptation  to 
political  governors  and  legislatures. 


Chapter  15. 


PUBLIC    EDUCATION. 


A.     The  Permanent  School  Fund. 

The  permanent  school  fund  had  in  bonds  and  cash  on  August 
31,  1880,  $3,542,126 ;  and  on  August  31,  1914,  it  had  $18,030,326 
in  bonds  and  cash,  and  $47,067,427  of  promissory  notes  of  the 
purchasers  of  school  lands/  Superficial  comparison  of  these 
amounts  shows  a  very  large  growth  in  the  principal  of  the  fund, 
but  as  a  matter  of  fact  the  growth  represents  the  conversion  of 
the  land  endowment  into  bonds  and  cash.  There  were  24,850,629 
acres  of  unsold  school  land  in  1880,  and  the  amount  in  1914  was 
1,847,445  acres.  The  total  amount  of  cash  received  by  the  perma- 
nent school  fund  from  land  sales  during  the  period  1880-1914 
was  about  seventeen  million  dollars.  Owing  to  the  defective 
administration  of  the  school  lands  during  the  larger  part  of  this 
period,  however,  the  permanent  fund  received  little  of  the  in- 
crease in  the  value  of  the  lands  after  1880. 

The  rapid  accrual  of  the  proceeds  of  the  sale  of  the  lands 
necessitated  changes  in  the  law  regulating  the  investment  of  the 
permanent  school  fund.  Until  1883  investment  was  restricted  to 
United  States  bonds  and  State  of  Texas  bonds.  The  pressure 
of  trust  funds  seeking  investment  in  United  States  and  the 
state 's  bonds  on  the  one  hand,  and  on  the  other  hand  the  activity 
of  the  United  States  and  the  state  during  the  early  eighties  to 
secure  their  bonds  for  payment  forced  the  permanent  school  fund 
and  the  other  trust  funds  of  the  state  to  pay  large  premiums  on 
all  bonds  w^hich  they  bought.  For  example,  the  par  value  of  the 
bonds  purchased  in  1881  and  1882  for  the  educational  and  asylum 
funds  of  the  state  was  $894,836,  but  on  account  of  premiums  the 
cost  was  $1,146,260.^     A  constitutional  amendment  was  proposed 


^The  amount  of  land  notes  held  by  the  fund  in  1880  is  not  published 
in  any  of  the  state's  reports.  Table  number  three  of  the  Report  of 
the  Comptroller  for  1914  gives  as  the  amount  of  railroad  bonds  held 
by  the  fund  $1,703,317.  This  figure  is  a  wholly  obsolete  one;  the 
actual  amount,  including  $100,000  of  state  penitentiary  railroad  bonds, 
was  $368,884.     Report  of  State  Treasurer,  1914,  p.  36. 

'The  Galveston  News,  February  13,  1883. 


362  Bulletin  of  the  University  of  Texas 

and  adopted  in  1883  which  provided  that  investment  should  be 
in  the  State  of  Texas  and  United  States  bonds,  bonds  of  counties 
in  this  state  and  in  such  other  securities  as  the  legislature  might 
direct.^  County  bonds  were  the  only  new  investments  authorized 
by  the  legislature.-  On  August  31,  1884,  the  permanent  school 
fund  held  $1,602,298  of  county  bonds ;  and  on  August  31,  1915, 
it  held  $9,188,575.  In  1885  it  was  enacted  that  no  bonds  which 
bore  less  than  six  per  cent  interest,  other  than  those  of  the  State 
of  Texas  or  of  the  United  States  should  be  purchased  by  any 
trust  fund  of  the  state,  nor,  w^ith  the  same  exception,  should  more 
than  par  be  paid  for  any  bond.^ 

In  1891  Governor  Hogg  advocated  that  the  first  mortgage  bonds 
of  railroads  which  might  thereafter  be  constructed  in  the  state 
should  be  added  to  the  legal  list  of  investments  of  the  permanent 
school  fund.^  This  proposal  ranked  in  popular  interest  next  to 
the  proposed  creation  of  a  railroad  commission.^  It  was  argued 
in  favor  of  the  proposal  (1)  that  existing  provisions  relating  to 
investments  were  not  sufficient  to  prevent  a  surplus  from  ac- 
cumulating in  the  permanent  fund ;  (2)  that  investments  in  county 
bonds  were  encouraging  a  spirit  of  extravagance  in  the  counties ; 
(3)  that  needed  railroad  construction  would  be  fostered,  and  (4) 
that  previous  investments  of  the  fund  in  railroad  securities  had 
been  satisfactory.^  In  opposition  it  was  stated  (1)  that  the 
security  would  be  inadequate;  (2)  that  speculative  railroad  build- 
ing would  be  stimulated ;  and  (3)  that  there  were  more  important 
objects  than  railroads  which  needed  to  be  encouraged.^  Substi- 
tute proposals  were  (1)  that  loans  should  be  made  to  the  people 
on  real  estate  security,  or  (2)  that  the  state  should  borrow  the 
money  at  a  low  rate  of  interest  and  apply  the  proceeds  to  meet- 
ing current  expenditures,  thereby  reducing  taxes;  or  (3)   that 

^Laws  of   1883,  p.  131.     Laws  of  1884,  p.   1. 

=Laws  of   1884,   p.   39. 

"Laws  of  1885,   p.   41. 

'House  Journal,  22nd  Leg.,  Reg.  Sess.,  p.  113. 

''The  Galveston  News,  February  1,  1891. 

^Message  of  Governor  Hogg,  January  21,  1891;  House  Journal,  22nd 
Leg.,  Reg.  Sess.,  p.  113. 

'See  Galveston  News,  January  28,  and  February  1,  1891.  The  News 
itself  seemed  to  favor  Governor  Hogg's  proposal. 


A  Financial  History  of  Texas  363 

investments  in  the  securities  of  towns  and  villages  organized  as 
school  districts  should  be  authorized/ 

None  of  the  foregoing  proposals  was  adopted,  but  instead  an 
amendment  to  the  constitution  was  proposed  and  adopted  in 
1891  which  authorized  the  legislature  to  transfer  annually  from 
the  permanent  school  fund  to  the  available  school  fund  not  more 
than  one  per  cent  of  the  permanent  school  fund,  and  in  1892  a 
law  was  enacted  Avhich  provided  for  an  annual  transfer  of  one 
per  cent."  The  purpose  of  this  amendment  and  statute  was  to 
help  the  available  school  fund  in  its  effort  to  carry  out  the  con- 
stitutional mandate  that  the  public  free  schools  should  be  main- 
tained each  year  for  a  period  of  not  less  than  six  months.^  The 
law  was  repealed  March  1,  1899,  after  a  total  of  $1,336,461.68  was 
transferred.  The  amounts  transferred  each  year  were  small  in 
proportion  to  the  size  of  the  available  school  fund.  The  small 
benefit  to  the  available  fund  of  the  transfer  and  the  impairment 
of  the  principal  of  the  permanent  fund  by  this  diversion  call  for 
an  unfavorable  judgment  upon  the  legislation. 

In  1893  investment  in  county  bonds  bearing  not  less  than  five 
per  cent  interest  was  authorized  to  the  permanent  fund.*  By 
1899  money  was  accumulating  in  the  fund  beyond  its  ability  under 
the  law  to  invest  it.  Consequently  the  bonds  of  incorporated 
cities  were  made  legal  investments  of  the  fund,  and  the  state 
board  of  education  was  given  an  option  of  ten  days  on  all  bonds 
afterwards  issued  by  the  counties  and  incorporated  cities  of  the 
state.^  The  purchase  of  bonds  bearing  as  low  as  three  per  cent 
interest  was  authorized,  and  it  was  further  provided  that  should 
a  premium  be  paid  an  amount  equal  to  the  premium  should  be 
transferred  to  the  permanent  school  fund  out  of  the  interest  on 
the  bonds  when  received  by  the  available  school  fund.     This  pro- 


^See  Galveston  News,  January  28  and  February  1,  1891.  See  letter 
signed  "Progressive  Texan"  in  the  News  of  February  1,  1891. 

^Laws  of  1891,  p.  195.  Laws  of  1892,  p.  8.  This  amendment  has 
been   called   the  "Jester  Amendment." 

^Message  of  Governor  Hogg,  March  14,  1892;  House  Journal,  22nd 
Leg.,  Called  Sess.,  p.   19. 

*Laws  of  1893,  p.  184. 

^Laws  of  1899,  pp.  143  and  231.  Message  of  Governor  Sayers,  Jan- 
uary 16,   1903. 


364  Bulletin  of  the  University  of  Texas 

vision  wa^  designed  to  prevent  an  impairment  of  the  principal 
of  the  fund  similar  to  what  had  been  done  in  the  early  eighties. 
If  bonds  were  purchased  at  a  discount,  the  law  required  that 
the  discount  should  be  turned  over  to  the  available  school 
fund  when  the  bonds  were  paid.  In  1901  the  bonds  of  inde- 
pendent school  districts  were  made  legal  investments,  and  in  1909 
the  bonds  of  common  school,  road,  drainage,  irrigation,  naviga- 
tion and  levee  districts  were  added  to  the  list.^  On  August  31, 
1915,  the  permanent  school  fund  held  $6,454,613  of  city  and  school 
district  bonds. 

According  to  the  comptroller's  report  for  1915  the  permanent 
school  fund  had  on  hand  August  31,  1915,  $1,703,317  of  railroad 
bonds.  Of  these  $1,603,317  were  purchased  under  the  act  of 
1856  and  $100,000  were  state  penitentiary  railroad  bonds.  The 
actual  amount  of  the  bonds  purchased  under  the  act  of  1856  which 
were  in  good  standing  was  $263,533.-  The  railroads  which  had 
borrowed  of  the  school  fund  under  the  act  of  1856,  with  the 
exception  of  the  Houston  Tap  and  Brazoria  which  was  sold  under 
foreclosure  proceedings  by  the  state  in  1871,  made  payments  of 
interest  and  sinking  fund  in  accordance  with  the  act  of  August 
13,  1870.  The  Houston  and  Texas  Central  acting  for  the  Wash- 
ington County  Railroad  stopped  payments  to  the  school  fund  on 
the  debt  of  the  Washington  County  Railroad  on  November  1, 
1879,  claiming  that  the  debt  to  the  fund  was  paid. 

The  contention  of  the  Houston  and  Texas  Central  was  that 
the  state  warrants  which  had  been  received  by  the  state  for  the 
interest  and  sinking  fund  obligations  of  the  Washington  County 
Railroad  were  valid  tender  and  that  the  amount  of  the  payments 
in  such  tender  added  to  the  payments  since  1870,  together  with 
payments  at  other  times,  constituted  a  full  discharge  of  the  debt.^ 


^Laws  of  1901,  p.  312.  Laws  of  1909,  p.  216.  In  1910  Galveston 
County  Causeway  bonds  were  admitted  to  the  list  of  legal  investments. 
Special  Laws  of  1910,  pp.  53,  and  161.     Rev.  Civil  Stats.,  1911,  art.  2736. 

-Report  of  the  Comptroller,  1915,  p.  18.  The  amount  given  in  table 
three  of  this  report  should  be  changed  to  fit  the  facts.  See  also 
Report  of  the  State  Treasurer,  1914,  p.  36. 

^'Message  of  Governor  Roberts  on  the  Special  School  Fund  Loaned 
to  Railroad  Companies,  January  11,  1881.  Report  of  the  Comptroller, 
1891,  p.  XIX. 


A  Financial  History  of  Texas  3(55 

The  state  did  not  contest  the  refusal  of  the  railroad  to  make 
further  payments.  In  1883,  however,  when  the  state  made  pro- 
vision for  the  payment  of  the  bonds  which  had  been  executed  to 
the  school  fund  under  the  act  of  November  15,  1864,  it  was  en- 
acted that  the  interest  and  sinking  fund  payments  on  the  amounts 
paid  in  warrants  by  the  railroads  in  1864  and  charged  as  principal 
in  1870,  which  payments  the  railroads  were  making  under  pro- 
test, should  thereafter  constitute  a  part  of  the  revenue  of  the 
state. ^  The  amount  paid  over  by  the  available  school  fund  dur- 
ing the  ten  years  1885-1894  was  $90,957.46.  The  Houston  and 
Texas  Central  and  the  Galveston,  Harrisburg  and  San  Antonio 
railroads  made  payments  up  to  November  1,  1893,  of  the  interest 
and  sinking  fund  on  their  own  debts  to  the  school  funds,  but 
they  stopped  payments  at  that  date  and  claimed  that  their  debts 
to  the  fund  were  fully  paid.  This  claim  was  based,  like  that  in 
behalf  of  the  Washington  County  Railroad,  upon  the  validity  of 
the  payments  in  state  warrants  in  1864  and  1865.  The  state 
brought  suit  to  compel  further  payments,  and  the  district  and 
the  supreme  courts  of  the  state  found  in  favor  of  the  state.  The 
state  courts  held  that  the  payments  in  treasury  warrants  in  1864 
and  1865  were  null  and  void.  But  the  Supreme  Court  of  the 
United  States  reversed  the  decision  and  held  that  the  payments 
in  state  warrants  were  valid.-  The  Southern  Pacific  (the  old 
Texas  and  Pacific)  and  the  Texas  and  New  Orleans  were  the  only 
roads  indebted  to  the  school  fund  which  were  not  involved  in 
this  decision.  The  Southern  Pacific  completed  payment  on  its 
debt  in  1898,  and  the  railroad  bonds  held  by  the  permanent  school 
fund  were  accordingly  reduced  $150,000  in  amount.  The  Texas 
and  New  Orleans  was  the  only  road  on  August  31,  1915,  which 
was  indebted  to  the  permanent  fund  under  the  act  of  1856,  and 
this  was  to  the  amount  of  $263,533." 

The  policy  of  investment  for  the  permanent  school  fund  since 


^Laws  of  1883,  p.  15. 

-H.  &  T.  C.  R.  R.  V.  Texas,  177  U.  S.,  66-103  (1899).  Report  of  the 
Comptroller,  1898,  p.  XI,  and  1902,  p.  5. 

^The  reports  of  the  comptroller,  however,  contain  tables  of  the 
obsolete  Indebtdness  of  the  Galveston,  Harrisburg  and  San  Antonio, 
the  Houston  and  Texas  Central,  and  the  Washington  County  railroad 
companies.     See  Report  of  the  Comptroller,  1915,  pp.  19-20. 


366  Bulletin  of  the  University  of  Texas 

the  Civil  War  has  been  to  restrict  the  investments  to  public  securi- 
ties, and  this  has  been  a  wise  policy.  The  success,  with  one  ex- 
ception, of  the  investments  in  railroad  bonds  under  the  act  of 
1856  does  not  ensure  the  success  of  similar  investments  today. 
The  old  investments  were  made  before  the  days  of  overcapitaliza- 
tion abuses,  and  though  railroad  capitalization  is  regulated  in 
Texas  today,  this  regulation  has  not  prevented  roads  built  subject 
to  the  law  from  getting  into  serious  financial  difficulties.  The  re- 
strictions imposed  upon  the  issue  of  public  bonds  and  the  broad- 
ness of  their  security  make  them  the  safest  investments  for  trust 
funds. 

In  1883  the  state  ''debt  of  doubtful  validity"  held  by  the  per- 
manent school  fund  was  validated  and  ordered  paid  with  accrued 
interest  of  $111,414.45.^  The  6%  bonds  to  the  amount  of  $320,- 
367.13  which  had  been  held  by  the  school  fund  since  May  13,  1865, 
were  paid  with  accrued  interest  in  1883 ;  but  the  principal  of  the 
$82,168.82  5%  bonds,-  which  had  been  carried  by  the  fund  since 
1868,  were  not  paid  until  1885,  though  the  accrued  interest  on 
them  was  paid  in  1883. 

In  addition  to  the  state  permanent  school  fund  there  are  county 
permanent  school  funds  which  are  based  on  the  land  grants  made 
to  the  counties  for  educational  purposes.  The  sale  of  the  lands 
and  the  investment  of  the  proceeds  have  been  vested  in  the  county 
commissioners'  courts,  subject,  however,  to  a  modicum  of  state 
regulation.  On  August  31,  1914,  the  several  county  permanent 
school  funds  amounted  as  follows  r 

Land  notes $  5,379,899 

Bonds  and  other  securities 4,709,604 

Cash 449,975 

Unsold  lands  (estimated  value) 2,085,448 

Total $12,624,927 

The  income  of  the  county  funds  in  1914  was  $545,816. 


^Laws  of  1883,  p.  15. 

^MSS.  Report  of  the  Superintendent  of  Public  Instruction,  1913- 
1914.  No  statistical  report  of  the  superintendent  of  public  instruction 
was  published  for  1913-1914.  For  a  brief  account  of  the  legislation  to 
1890  relating  to  county  school  lands  see  Sayles,  op.   cit.,  pp.  411-417. 


A  Financial  History  of  Texas  367 

B.     The  Available  School  Fund. 

The  available  school  fund  has  had  an  enormous  growth  since 
1880.  In  1880  the  receipts  to  the  fund  from  taxes  were  only 
$497,166.40  and  from  interest  on  the  permanent  school  fund, 
$198,317.79 ;  and  the  combined  receipts  from  these  two  principal 
sources  of  revenue  were  $695,484.19.  The  receipts  from  the  per- 
manent fund  were  $18,672.45  from  interest  on  land  sales  and 
$179,645.34  from  interest  on  state  and  railroad  bonds.  On  August 
31,  1915,  the  receipts  to  the  available  fund  from  taxes  were 
$5,851,761.82,  and  from  the  permanent  fund  $2,147,297.35,  a 
total  of  $7,999,059.17.  Interest  on  land  sales  provided  after 
taxes  the  largest  revenue,  amounting  to  $1,319,401.20  in  1915 ; 
interest  on  county  and  common  school  district  bonds  came  next 
with  $385,767.20;  then,  in  order,  interest  on  city  and  independent 
school  district  bonds,  $323,922.67 ;  interest  on  state  bonds,  $87,- 
605 ;  interest  on  railroad  bonds,  $16,052.40 ;  interest  on  state  pen- 
itentiary railroad  bonds,  $5,000 ;  interest  on  deposits,  $1,751.16 ; 
land  leases,  $669.53,  and  unclassified,  $7,127.69.^ 

The  receipts  from  taxes  during  the  thirty -two  years  1880-1912 
were  $64,549,279.31  and  from  interest  on  the  permanent  fund  and 
lease  of  lands,  $38,996,079.38.  The  constituents  of  the  receipts 
from  the  permanent  fund  were  $18,785,708.73  from  interest  on 
land  sales;  $7,465,427.75  from  interest  on  county,  city  and  school 
district  bonds;  $6,910,707.97  from  lease  of  lands;  $3,868,581.63 
from  interest  on  state  bonds;  $1,546,193.91  from  interest  on  rail- 
road bonds;  $371,018.24  from  state  and  railroad  bonds  not  sepa- 
rated in  amounts ;  $31,376.55  from  interest  on  state  penitentiary 
railroad  bonds;  and  $17,064  from  interest  on  deposits. 

Owing  to  the  reduction  of  the  available  school  fund 's  share  of 
the  general  revenue  in  1880  and  1881  to  one-sixth,  the  years 
1880  and  1881  make  the  poorest  showing  as  to  the  amount  of  the 
available  fund  and  per  capita  apportionment  for  any  years  since 
1877.  The  amount  apportioned  in  1880  was  $679,317,  the  per 
capita  apportionment  was  $3.00,  and  the  scholastic  ages  were  from 
eight  to  fourteen.  One-sixth  of  the  general  revenue  rate  was 
equivalent  to  a  school  tax  rate  of  six  and  two-thirds  cents  in  1880 
and  five  cents  in  1$81.     The  school  tax  rate  in  1915  was  20  cents, 


'Report  of  the  Comptroller,  1915,  p.  6. 


368  Bulletin  of  the  University  of  Texas 

the  .amount  apportioned  was  $8,772,109,  the  per  capital  appor- 
tionment was  $8.00,  and  the  scholastic  ages  were  from  seven  to 
sixteen.^  But  between  1880  and  1915  a  number  of  changes  were 
made  which  related  to  the  available  fund. 

The  share  of  the  general  revenue  going  to  the  available  school 
fund  was  restored  to  one-fourth  for  1882  and  1883,  and  this  was 
equivalent  to  an  ad  valorem  rate  of  7%  cents  each  year. 

The  early  eighties  were  critical  years  in  the  history  of  the 
available  school  fund.  There  was  then  a  considerable  number 
of  people  in  the  state  who  were  hostile  to  public  education  and 
opposed  to  any  system  better  than  the  one  that  was  then  in 
operation.-  There  were  also  those  people  who  looked  forward 
to  a  marvelous  growth  of  the  permanent  school  fund  which  would 
provide  such  an  income  to  the  available  fund  as  would  render 
unnecessary  any  taxation  for  educational  purposes.^  But  the 
educational  situation  in  the  early  eighties  in  Texas  was  lament- 
able. The  average  school  term  in  1880  was  seventy-two  days, 
though  the  constitution  contemplated  one  hundred  and  twenty 
days.^  The  average  salary  of  white  male  teachers  was  $34,  that 
of  female  teachers,  $28.  There  were  no  local  school  taxes  levied 
in  the  state  in  1880,  except  in  two  or  three  independent  city  dis- 
tricts,^ so  that  the  support  of  the  schools  was  solely  the  meager 
dole  of  the  state  out  of  the  available  school  fund. 

Friends  of  public  education  realized  that  to  rely  upon  the 
income  from  the  permanent  fund  to  provide  an  adequate  system 
of  public  common  schools  was  a  delusion  and  that  the  only  way 
to  secure  such  a  system  was  by  state  and  local  taxation.^  The 
state  platform  of  the  Democratic  party  in  1882  called  for  the 
submission  of  a  constitutional  amendment  providing  for  a  special 


'Owing  to  failure  to  collect  all  of  the  revenues,  the  school  board 
was  unable  to  apportion  the  full  amount  agreed  upon,  $8,772,109. 
About  $7  was  paid  out  in  1915,  and  the  remaining  $1  was  paid  in  1916. 

'See  the  Galveston  News,  April  7,  1881. 

^See  the  Galveston  News,  July  2  and  8,  1882. 

^Biennial   Report  of  the  State  Board  of  Education,  1879-1880,   p.   3. 

'Ibid.,  p.  6.  Report  of  the  Superintendent  of  Public  Instruction, 
1897-1898,   p.   V. 

^Galveston  News,  July  2,  1882.  Biennial  Report  of  the  State  Board 
of  Education,  1879-1880,  p.   6. 


A  Financial  History  of  Texas  369 

school  tax,^  and  in  1883  an  amendment  was  adopted  which  au- 
thorized a  special  state  school  tax  not  to  exceed  twenty  cents  ou 
the  one  hundred  dollars'  valuation. ^  At  the  same  time  the  oppor- 
tunity for  local  taxation  was  enlarged  by  the  authority  granted 
to  form  school  districts  within  the  counties  and  to  levy  a  district 
tax  not  to  exceed  twenty  cents  on  the  one  hundred  dollars '  valua- 
tion.^ 

A  state  school  tax  of  121/2  cents  was  adopted  for  1884  and 
that  rate  was  unchanged  until  1895.*  But  reliance  upon  the 
income  from  the  permanent  fund  rather  than  upon  taxation  and 
also  the  defective  or  inefficient  administrative  handling  of  the 
available  fund  resulted  in  numerous  temporary  deficiencies  in 
the  fund.  Teachers  already  poorly  paid  had  their  salaries  dimin- 
ished by  having  to  sell  their  salary  warrants  at  a  heavy  discount. 

One  cause  of  the  deficiencies  which  commonly  made  their  ap- 
pearance during  the  late  summer  and  early  fall  months  was  the 
exhaustion  of  the  balance  carried  over  from  the  previous  fiscal 
year  and  the  practical  absence  of  any  tax  payments  during  these 
months.^  Another  cause  was  the  fluctuation  in  the  receipts  from 
interest  on  land  sales  and  from  lease  of  lands.®  For  example, 
the  receipts  from  interest  on  land  sales  fell  from  $455,379  in  1885 
to  $340,166  in  1886,  and  from  $616,284  in  1893  to  $282,823  in 
1894.  A  drought  would  parch  the  western  part  of  the  state,  as 
Avas  the  case  in  1888,  and  the  legislature  would  very  justly  grant 
to  delinquent  purchasers  several  months  extension  for  the  pay- 
ment of  interest,  but  this  would  cause  a  deficiency  in  the  avail- 
able school  fund.  There  were  deficiencies  in  1887,  1888  and 
1889,  and  in  1888  the  available  school  fund  was  loaned  $504,000 
out  of  the  general  revenue  in  order  that  the  outstanding  war- 
rants against  the  fund  could  be  paid.'     $254,000  of  this  amount 


^Galveston  News,  September  12,  1882.  See  also  issues  of  February 
22  and  March  3,  1883. 

=Laws  of  1884,  pp.  IV  and  38. 

^Laws  of  1884,  p.  38. 

*Laws  of  1884,  p.  67. 

'Report  of  the  Superintendent  of  Public  Instruction,  1887-1888.  p.  19. 

^Reports  of  the  comptroller,  1887,  1888,  Galveston  News,  April  24, 
1888.  Message  of  Governor  Culberson,  January  16,  1895;  House  Jour- 
nal, 24th  Leg.,  p.  52. 

'Laws  of  1888,  p.  7. 


24 — H 


370  Bnlletin  of  the  University  of  Texas 

was  a  loan  without  interest  and  was  to  be  returned  not  later 
than  January  1,  1895,  if  the  condition  of  the  available  fund  at 
that  date  should  warrant  it.  It  was  not  returned.  The  other 
$250,000  was  the  loan  of  a  sinking  fund  for  the  state  bonds 
maturing  in  1890  and  1891.  It.  too,  was  never  repaid.  But  in 
spite  of  this  loan  there  was  a  deficit  in  the  following  year,  1889.^ 

The  vicissitudes  of  the  school  fund  during  the  latter  eighties 
explain  the  adoption  of  the  "Jester  Amendment"  by  which  one 
per  cent  of  the  permanent  school  fund  was  transferred.  The 
first  transfer  was  made  in  1892,  the  last  in  1898,  and  a  total  of 
$1,336,461.68  was  transferred.  But  this  law  was  ineffective  to 
prevent  deficiencies,  and  on  August  31,  1894,  the  amount  of  the 
deficiency  was  $659,468.50.-  During  the  preceding  A^ears  of 
financial  depression  and  of  inefficient  administration,  there  ac- 
cumulated arrears  of  interest  on  land  sales  and  of  lease  payments 
estimated  to  amount  to  $1,000,000  on  January  1,  1895.=*  To 
meet  the  bad  conditions  the  state  school  tax  rate  was  fixed  at  20 
cents  for  1895  and  at  18  cents  thereafter.  The  rate  remained  at 
18  cents  until  1907  when  it  was  again  fixed  at  20  cents,  but  from 
1907  through  1912  it  was  16%  cents.  In  1913  the  rate  was  17 
cents  and  in  1914  and  1915  it  was  20  cents.  The  increase  in  the 
rate  for  1907  was  to  compensate  for  the  loss  to  the  fund  from  the 
expected  repeal  of  the  license  taxes  upon  the  so-called  useful 
occupations.* 

The  school  tax-  rate  has  been  fixed  since  1907  by  the  automatic 
tax  rate  board. ^  The  board  fixes  a  rate  which  will  produce  $4 
per  capita  of  the  children  within  the  scholastic  ages,  provided 
the  rate  does  not  exceed  the  constitutional  limit  of  twenty  cents. 
In  1908  the  constitutional  maximum  of  the  independent  school 
district  tax  was  raised  to  20  cents.^  Local  taxes  for  public 
schools  increased  from  $469,392  in  1891  to  $5,642,482  in  1911." 

^Galveston  News,  April  4,  1889. 

^Report  of  the  Superintendent  of  Public  Instruction,  1893-1894, 
p.  IX. 

^Message  of  Governor  Culberson,  January  16,  1895. 

"Laws  of  1907,  p.  141. 

"Laws    of    1907,    p.    465. 

*Laws  of   1909,    p.    18.  * 

^The  statistics  for  1911  are  taken  from  the  Report  of  the  United 
States  Commissioner  of  Education,  1912,  vol.  2,  p.  14. 


A  Financial  History  of  Texas  371 

The  system  of  distribution  of  the  available  school  fund  among 
the  counties  of  the  state  has  been  frequently  criticized.^  Ap- 
portionment on  the  basis  of  scholastic  population  operates  to 
cause  a  certain  inequality  between  the  counties  which  have  a 
large  margin  between  school  attendance  and  scholastic  popula- 
tion and  the  counties  which  have  a  small  margin.  The  com- 
pulsory education  law  will  be  one  remedy  for  this  inequality, 
while  another  remedy  would  be  to  base  apportionment  on  the 
number  in  attendance  on  the  schools  the  previous  year.  An- 
other inequality  charged  against  the  present  system  of  distribu- 
tion is  that  some  of  the  wealthier  counties  take  out  of  the  fund 
more  than  they  contribute  in  taxes.  This  is  rank  injustice,  but 
it  is  due  rather  to  the  weakness  in  the  state's  system  of  assess- 
ing property  for  state  purposes  than  to  the  method  of  appor- 
tionment of  the  school  funds. 

Though  Texas  has  the  largest  permanent  school  fund  of  any 
state  in  the  Union  and  though  the  available  school  fund  bulks 
large  in  absolute  amount,  the  state  ranks  low  in  educational 
standards.  Progress  is  being  made,  however,  as  is  shown  by  the 
increase  in  the  expenditures  per  capita  of  population  and  in  the 
growth  in  the  per  cent  of  the  scholastic  population  enrolled  in 
the  public  schools.^  In  1915  a  compulsory  education  law  was 
adopted,  and  an  appropriation  of  $500,000  a  year  for  two  years 
in  aid  of  the  country  public  schools  was  made.^  These  were 
epochal  measures  and  will  promote  greatly  the  educational  pro- 
gress of  the  state. 

Per  cent  of  school 
Expended  per  capita  of  population.  population  enrolled. 

1879-1880   $0.65  42.40 

1889-1890   1.42  59.50 

1899-1900   1.46  64.67 

1909-1910   3.02  67.24 

1910-1911   2.96  65.66 


^Report  of  the  Superintendent  of  Public  Instruction,  1885-1S86,  p.  14; 
1897-1898,  p.  XV. 

^Report  of  the  United  States  Commissioner  of  Education,  1912,  vol. 
2,  pp.  8  and  15. 

•''Laws  of  1915,   Reg.   Sess.,   p.  92.     Laws  of  1915,    Spec.   Sess.,  p.   22. 


372  Bulletin  of  the  University  of  Texas 

C.     The  University  of  Texas. 

In  1880  Texas  did  not  expend  out  of  the  general  revenue  as 
much  as  one  cent  on  higher  education.  There  was  disbursed, 
however,  out  of  the  university  land  sales  fund  and  the  Agri- 
cultural and  Mechanical  College  fund  $35,754.99  for  the  Agri- 
cultural and  Mechanical  College  and  the  Prairie  View  Normal. 
In  1915  $1,219,093.91  was  expended  out  of  the  general  revenue 
and  $328,215.57  out  of  the  special  funds— a  total  of  $1,547,- 
309.48— for  higher  education.^  This  growth  in  expenditures  for 
higher  education  has  attended  the  establishment  and  develop- 
ment of  the  University  of  Texas,  four  normals,  and  the  Girls' 
Industrial  College,  and  the  expansion  of  the  Agricultural  and 
iMechanical  College  and  the  Prairie  View  Normal. 

In  1880  there  was  one  active  university  account  upon  the  books 
of  the  treasury  and  it  was  called  the  "University  Land  Sales 
Account";  another  account  called  the  ''University  Fund"  was 
inactive  and  was  made  up  only  of  the  state  bonds  of  doubtful 
validity,  amounting  to  $134,472.24  Into  the  university  land 
sales  account  went  the  receipts  from  the  sale  of  university 
lands  and  from  the  interest  on  bonds.  The*  receipts  from  land 
sales  were  invested  in  State  of  Texas  bonds,  as  required  by  the 
constitution  (art.  7,  sec.  11),  while  the  interest  receipts  were 
expended  in  1880  for  a  clerk  in  the  state  treasury  department, 
for  surveying  the  university  lands,  and  for  the  maintenance  of 
the  Agricultural  and  Mechanical  College  and  the  Prairie  View 
Normal. 

In  1882  the  "University  Land  Sales  Account"  was  succeeded 
upon  the  books  of  the  treasury  by  the  "Permanent  University 
Fund ' '  and  the  ' '  Available  University  Fund. '  '^  The  permanent 
fund  is,  in  the  language  of  the  constitution  (art.  7,  sec.  11), 
made  up  of  "all  lands  and  other  property  heretofore  set  apart 
and  appropriated  for  the  establishment  and  maintenance  of  the 
University  of  Texas,  together  with  all  the  proceeds  of  sales  of 
the  same,  heretofore  or  hereafter  to  be  made,  and  all  grants, 


^The  amount  given  as  expended  out  of  the  general  revenue  was  the 
amount  of  warrants  drawn  on  that  fund. 

'The  two  other  funds,  the  University  Fund  and  the  University  Fund 
Expense  Account,  disappear  after  1883. 


A  Financial  History  of  Texas  378 

donations  and  appropriations  that  may  hereafter  be  made  by 
the  State  of  Texas,  or  from  any  other  source."  In  1882  the 
permanent  university  fund  received  from  the  university  land 
sales  account  $332,435.66  in  State  of  Texas  bonds,  a  comptrol- 
ler's certificate  of  indebtedness  for  $10,300.41  and  $986.61  in 
cash.  The  available  university  fund  received  from  the  land 
sales  account  $34,464.34  in  bonds. 

The  constitution  requires  that  the  permanent  fund  shall  be 
invested  in  State  of  Texas  bonds,  but  if  they  should  not  be  ob- 
tainable, in  United  States  bonds.  In  1889  when  the  general 
revenue  account  was  threatened  with  a  deficiency  it  was  enacted 
that  5  per  cent  bonds  of  the  state  should  be  sold  at  par  to  the 
permanent  university  fund,  these  bonds  to  be  redeemable  at 
the  pleasure  of  the  state.^  This  measure,  passed  as  it  was  to  pro- 
vide for  an  emergency,  has  not  been  repealed,  though  as  a 
standing  method  of  increasing  the  state  debt  it  is  doubtless  un- 
constitutional.2  The  permanent  fund  held  in  1915  $429,700  of 
3  per  cent  state  bonds  and  $173,900  of  5  per  cent  state  bonds. 
The  fund  could  be  invested  to  better  advantage  than  in  3  per  cent 
state  bonds.  City,  county,  and  school  and  other  special  district 
bonds  are  issued  which  bear  5  per  cent,  5V2  per  cent  and  6  per 
cent  interest,  and  if  these  are  acceptable  investments  for  the 
permanent  school  fund  they  should  be  for  all  the  permanent 
funds. 

The  state  debt  of  doubtful  validity  was  validated  and  ordered 
paid  with  accrued  interest  in  1883.^  The  total  received  by  the 
university  funds  was  $256,272.57,  of  which  $144,772.65  was  of 
the  nature  of  the  principal  of  a  debt.  The  available  university 
fund  received  of  this  payment  $132,056.16  in  1883  and  1884. 

With  the  exception  of  the  payment  of  the  debt  of  doubtful 
validity  the  history  of  the  permanent  university  fund  since  1 880 
has  been  uneventful.  From  1880  through  1915  the  total  re- 
ceived by  the  fund  from  sales  of  land  was  $291,711.34,  and  this 
sum  represents,  with  one  exception,  the  payments  on  the  pur- 
chase price  of  the  lands  contained  in  the  old  endowment  of  fifty 


^Laws  of   1889,  p.   81. 

^Revised  Civil  Stats.,  1911,  art.  2652. 

^Acts  of  1883,  p.  15.     House  Journal,  17th  Leg.,  Called  Sess.,  p.  27. 


374  Bulletin  of  the  TJniversity  of  Texas 

leagues/  The  western  lands  of  the  University  have  not  been  on 
the  market  for  sale  during  this  period.  In  1881  there  were 
32,335  acres  of  the  fifty  leagues  grant  unsold  and  the  unpaid 
balances  on  the  notes  given  in  purchase  amounted  to  $155,000  ;^ 
by  1915  all  of  the  fifty  leagues  were  sold  and  there  was  $26,- 
572.77  in  land  notes.^ 

The  interest  on  the  bonds  and  other  interest-bearing  assets  of 
the  permanent  fund  goes  into  the  available  university  fund  and 
is  expended  under  the  direction  of  the  legislature.  In  1880  the 
disposable  income  amounted  to  $24,515  and  was  classified  as  de- 
rived from  interest  on  state  bonds.*  In  1915  the  available  fund 
received  $228,850.32  exclusive  of  legislative  appropriations. 
$169,057.11  of  this  amount  was  derived  from  lease  of  lands; 
$34,855.86  from  student  fees;  $21,586  from  interest  on  state 
bonds;  $1,135.16  from  interest  on  land  notes;  and  $2,216  from 
interest  on  rentals  past  due.^  Until  1897  interest  on  state  bonds 
was  the  leading  source  of  income  to  the  available  fund,  but  in 
that  year  lease  of  lands  took  the  lead.  Receipts  from  lease  of 
university  lands  began  in  1887  when  they  amounted  to  $451.20. 

The  available  university  fund  has  been  drawn  upon  by  the 
legislature  from  time  to  time  for  appropriations  to  the  Agri- 
cultural and  Mechanical  College  and  the  Prairie  View  Normal 
School.  From  1880  through  1889  $55,600  was  diverted  to 
Prairie  View  and  from  1880  through  1899  $65,000  was  approp- 
riated to  the  Agricultural  and  Mechanical  College.  In  1861 
and  1862  the  state  used  $11,307.02  of  the  university  fund  for 
which  no  restitution  was  made  in  1883.  So  in  1888  when  Texas 
received  nearly  one  million  dollars  from  the  United  States  as  in- 


^The  reports  of  the  comptroller  for  1905  and  1906  are  wholly  er- 
roneous as  to  the  receipts  from  sale  of  university  lands,  and  the  re- 
ports since  1909  do  not  classify  the  receipts  to  the  available  university 
fund  from  interest  on  land  sales,  etc.  The  data  for  these  years  have 
been  obtained  from  the  reports  of  the  board  of  regents. 

'Report  of  the  Board  of  Regents,  1882,  p.  6. 

'See  chapter  on  public  lands  for  a  further  account  of  the  university 
lands. 

*There  is  no  information  as  to  the  amount  of  interest  on  land  notes. 

•These  statistics  were  obtained  from  the  manuscript  report  of  the 
auditor  of  the  main  University.  They  differ  from  those  in  the  comp- 
troller's report  for  1915. 


A  Financial  History  of  Texas  375 

demnity  for  expenses  in  protecting*  the  frontier  the  claims  of 
the  University  were  presented  for  funds  diverted  and  for  losses 
on  account  of  Confederate  notes  received  in  payment  of  land 
during-  the  Civil  War.  Under  the  guise  of  a  loan  which  was  to 
be  repaid  on  or  before  January  1,  1910,  the  available  fund  re- 
ceived $125,000  which  was  stated  to  be  in  full  satisfaction  of  all 
claims  of  the  University  for  money  drawn  by  the  state/ 

The  disbursements  of  the  available  university  fund  from  1882 
through  1915,  excluding  $150,000  received  by  the  fund  from 
the  general  revenue  and  the  $50,000  of  the  fund  appropriated 
to  the  Agricultural  and  Mechanical  College,  amounted  to  $3,- 
373,896.70.  In  this  same  period  there  was  disbursed  for  the  Uni- 
versity out  of  the  general  revenue  fund  of  the  state  $4,349,860.99.- 
Appropriations  out  of  the  general  treasury  have  shown  a  ten- 
dency since  1900  to  be  more  liberal ;  at  the  same  time  they  have 
not  grown  with  the  needs  of  the  institution  if  the  reports  of 
the  board  of  regents  -are  to  be  trusted.  In  recent  years  the  Uni- 
versity has  felt  keenly  the  need  of  more  buildings.  The  con- 
stitution (art.  7,  sec.  14)  prohibits  any  appropriation  of  money 
out  of  the  general  revenue  for  university  buildings.  This  limi- 
tation is  one  of  the  many  archaic  financial  provisions  of  the 
present  constitution.  In  1881  it  was  circumvented  by  an  ap- 
propriation under  the  guise  of  a  loan,  but  in  1891  an  appropria- 
tion for  a  building  was  made  outright.  The  legislature  has  since 
1891  provided  for  buildings  for  the  University  and  the  Agri- 
cultural and  Mechanical  College,  but  the  items  have  been  vetoed 
on  constitutional  grounds,  though  the  veto  has  not  been  con- 
sistently applied  in  the  case  of  either  institution  and  especially 
in  the  case  of  the  Agricultural  and  Mechanical  College,  which 
is  legally  a  branch  of  the  University  of  Texas.  In  1913  a  con- 
stitutional amendment  was  submitted  to  the  people  which  pro- 
posed to  empower  the  legislature  to  authorize  the  issue  of  bonds 
for  the  purpose  of  purchasing  additional  grounds  and  of  erect- 
inor  buildings  for  the  University,  but  the  amendment  was  un- 


^Laws  of  1888,  p.  19.  J.  J.  Lane,  History  of  Education  in  Texas,, 
p.  142. 

=This  is  the  amount  of  warrants  drawn.  Because  of  typographical 
errors  in  the  reports  of  the  comptroller's  department  one  cannot  be 
sure  that  this  amount  is  correct. 


376  Bulletin  of  the  University  of  Texas 

fortunately  too  plenary  in  its  proposed  grant  of  power  to  in- 
crease debt,  though  its  defeat  was  actually  accomplished  by  a 
factional  spirit  and  by  the  blind  "no  debt,  lighter  tax"  senti- 
ment.^ The  principal  of  the  proposal  is  incontestably  correct, 
however,  and  it  has  been  adopted  by  the  state  in  the  case  of  the 
penitentiary  system. 

D.     TJie  Agricultural  and  Mechanical  College. 

The  permanent  fund  of  the  Agricultural  and  Mechanical  Col- 
lege has  consisted  up  to  the  present  time  of  the  $209,000  of  state 
bonds  in  which  the  proceeds  of  the  sale  of  original  land  endow- 
ment by  the  Federal  government  were  invested.  Since  by  the 
Constitution  of  1876  (art.  7,  sec.  13)  the  College  is  a  branch  of 
the  University  of  Texas  the  permanent  university  fund  is  in  a 
way  the  permanent  fund  also  of  the  College.  And  in  the  grant 
to  the  University  of  one  million  acres  of  land  in  1883  the  act 
specified  that  this  land  endowment  was  for  the  University  and 
its  branches,  including  the  branch  for  the  education  of  negroes.- 

The  income  from  the  Agricultural  and  Mechanical  College 
fund  constitutes  but  a  fraction  of  the  receipts  of  the  college.  In 
1915  it  amounted  to  only  $6,150.  From  1880  to  1890  the  uni- 
versity fund  constributed  substantially  to  the  maintenance  of 
the  college  and  from  1880  through  1899  the  total  of  the  uni- 
Tersity  funds  appropriated  to  the  college  was  $65,000.  Since 
1900  there  has  been  a  tendency  for  more  liberal  treatment  of 
the  institution  by  the  legislature.  The  total  disbursements  out 
of  the  general  treasury  for  the  College  and  the  experiment  sta- 
tions during  the  period  1880-1915  was  $3,618,210.^     The  amount 

^Laws  of  1913,  p.  457. 

^J.  J.  Lane,  History  of  Education  in  Texas,  p.  135.  As  a  result  of  an 
agreement  between  the  governing  boards  of  the  two  institutions  the  Uni- 
versity has  turned  over  to  the  A.  and  M.  a  share  of  the  permanent 
fund  in  the  form  of  land  notes,  but  this  has  not  proven  to  be  satis- 
factory. A  constitutional  amendment  was  defeated  in  July,  1915,  which 
provided  for  a  division  of  the  land  endowment  and  for  a  repeal  of  the 
constitutional  provision  against  appropriations  out  of  the  state  treas- 
ury for  buildings  for  the  University. 

^This  is  the  amount  of  warrants  drawn  on  the  general  treasury  of 
the  state. 


A  Financial  History  of  Texas  377 

derived  during  this  period  from  the  permanent  fund  of  the  in- 
stitution was  over  $515,000.^  The  Agricultural  and  Mechanical 
College  is  the  beneficiary  of  the  experiment  station  acts  of  the 
Federal  government,  and  in  addition,  it  has  received  the  fees 
for  the  state  inspection  of  animal  foodstuffs  and  state  control  of 
fertilizers.- 

E.     Other  HigJier  Educational  Institutions. 

The  other  state  institutions  for  higher  education,  consisting 
of  the  Girls'  Industrial  College,  the  Sam  Houston  Normal,  the 
North  Texas  State  Normal,  the  Southwest  Texas  State  Normal, 
the  West  Texas  State  Normal,  and  the  Prairie  View  Normal  were 
all,  with  the  exception  of  the  last,  established  since  1880.  The 
Girls'  Industrial  College  dates  from  1901  and  up  to  1915  it  had 
received  $756,410.54  out  of  the  general  treasury.  The  great 
growth  in  the  expenditures  for  the  white  normals  dates  from 
1900.  Between  1900  and  1915  three  of  them  were  established 
and  disbursements  increased  from  $40,499.73  to  $251,769.19. 
The  total  disbursed  for  the  white  normals  since  1880  and  through 
1915  was  $2,771,168.39.  In  1915  provision  was  made  for  ttie 
establishment  of  three  more  normals.  The  Prairie  View  Normal 
for  negroes  is  under  the  control  of  the  Agricultural  and  Me- 
chanical College  and  the  College  shares  with  the  normal  the  funds 
received  from  the  Federal  government.  The  university  fund 
contributed  $55,600  to  the  support  of  Prairie  View  between  1880 
and  1890.  From  1880  through  1915  the  disbursements  out  of 
the  general  treasury  for  this  normal  amounted  to  $747,688.47.* 


^The  exact  amount  cannot  be  derived  from  the  comptrollers'  reports 
because  of  their  failure  to  separate  investment  disburt^emeuts  from 
other  disbursements.  The  gross  total  of  the  disbursements  is  $536,- 
947.37. 

^Owing  to  the  way  in  which  the  financial  statements  are  drawn  up  in 
the  reports  of  the  board  of  directors  of  the  College  it  has  not  been 
possible  to  include  in  this  study  any  other  receipts  or  expenditures 
than  those  given  in  the  reports  of  the  comptroller.  This  excludes  the 
amounts  received  from  fees  and  from  the  Federal  government. 

'The  amounts  given  for  all  of  these  institutions  are  of  warrants 
drawn  on  the  general  treasury  of  the  state. 


378  Bulletin  of  the  University  of  Texas 

F.     A  Special  Tax. 

A  special  tax  for  the  benefit  of  all  the  higfher  educational 
institutions  has  been  earnestly  urged  by  the  friends  of  public 
higher  education.  The  constitution  (art.  3,  sec.  48)  legalizes 
a  tax  for  the  support  of  the  institutions,  with  the  exception  of 
the  normals.  It  reads  that  the  legislature  shall  have  the  right 
to  levy  taxes  for  ''the  support  of  public  schools,  in  which  shall 
be  included  colleges  and  universities  established  by  the  state; 
and  the  maintenance  and  support  of  the  Agricultural  and  Me- 
chanical College  of  Texas."  But  the  possible  conflict  between 
this  provision  and  article  7,  section  14,  which  prohibits  the  use 
of  the  funds  of  the  general  treasury  for  buildings  for  the  Uni- 
versity and  the  exclusion  of  the  normals,  makes  a  new  constitu- 
tional grant  of  special  taxation  desirable  to  the  University  and 
the  Agricultural  and  Mechanical  College  and  the  normals.  An 
adequate  special  tax  is  pressingly  needed  in  order  that  the 
institutions  may  be  spared  the  biennial  scramble  for  appropria- 
tions, and  in  order  that  they  may  plan  an  orderly  development 
and  with  sureness  work  to  the  realization  of  their  highest  possi- 
bilities. 


Chapter  16. 


FINANCIAL  ADMINISTRATION. 


The  governor  is  required  by  the  constitution  to  "present 
estimates  of  the  amount  of  money  required  to  be  raised  by 
taxation  for  all  purposes."^  It  has  long  been  the  practice  for 
the  comptroller  to  receive  from  the  departments  and  insti- 
tutions of  the  state  estimates  of  their  needs,  and  such  estimates 
are  usually  itemized.  These  are  published  in  the  report  of  the 
comptroller,  and  they  constitute  the  data  from  which  the  legis- 
laj:ure  works  in  making  appropriations  for  the  ensuing  two 
years. 

Upon  the  appointment  of  the  appropriation  committee  of  the 
house  of  representatives  and  of  the  finance  committee  of  the 
senate,  work  upon  the  general  appropriation  bill  begins.  Be- 
sides the  general  appropriation  act,  which  deals  with  over  sixty 
departments  and  institutions,  there  are  separate  acts  which  carry 
appropriations.  The  appropriation  committee  has  jurisdiction 
over  all  bills  appropriating  money.  It  is  impossible  for  the 
two  large  committees,  the  appropriation  committee  and  the 
finance  committee,  to  deal  intelligently  during  the  short  time  of 
a  legislative  session  with  the  data  submitted  at  the  beginning  of 
the  session,  and  the  practice  prevails  of  appointing  sub-commit- 
tees to  examine  the  institutions  and  report  upon  their  needs. 
The  reports  of  the  sub-committees  are  practically  final  so  far  as 
the  work  of  the  larger  committees  is  concerned.  When  a  bill  ap- 
propriating money  is  reported  to  the  house  of  representatives, 
the  house  resolves  itself  into  a  committee  of  the  whole  house  for 
the  consideration  of  the  bill.  This  rule  has  been  disregarded  in 
many  instances.^ 

It  is  customary  for  the  appropriation  bills  to  itemize  minutely 
the  grants  to  the  various  state  departments  and  most  of  the  state 


^Art.  4,  sec.  9. 

-House  Journal,   32nd  Leg.,  Reg.   Sess.,  p.   1482. 


380  Bulletin  of  the  University  of  Texas 

institutions.  The  exceptions  from  minute  itemization  Lave  been 
the  higher  educational  institutions  and  the  penitentiary.^ 

The  constitution  provides  that  "if  any  bill  presented  to  the 
governor  contains  several  items  of  appropriation,  he  may  object 
to  one  or  more  of  such  items,  and  approve  the  other  portion  of 
the  bill."^  Though  a  veto  may  be  overridden  by  a  two-thirds 
majority  of  the  members  present  of  each  branch  of  the  legisla- 
ture, the  fact  that  the  appropriation  bill  is  one  of  the  last  to  be 
passed  and  that  the  governor  has  ten  days  in  which  to  consider 
it,  results  in  a  veto  remaining  unchallenged.  The  more  minute 
the  itemization,  the  greater  is  the  check  by  the  governor  upon 
appropriations.  The  veto  right  has  been  frequently  exercised. 
The  system  of  biennial  appropriations,  combined  with  the  veto 
prerogative  and  the  constitutional  prohibition  of  appropriations 
out  of  the  general  treasury  for  the  construction  of  university 
buildings  not  only  have  proved  a  handicap  to  the  development 
of  any  permanent  policy  by  the  higher  educational  institutions 
but  also  have  resulted  at  times  in  serious  jeopardy  even  to  the 
maintenance  of  the  institutions  along  existing  lines  of  activity. 

Since  1899  there  has  been  a  considerable  increase  in  the  length 
of  the  appropriation  act  through  the  introduction  of  provisos  and 
limiting  conditions  which  refer  to  the  transfer  of  surpluses,  the 
creation  of  deficiencies,  and  such.  Since  1905  there  has  been 
regularly  incorporated  in  it  a  provision  against  the  diversion  of 
a  surplus  from  one  account  to  another  and  against  the  creation 
of  deficiencies  by  any  department  or  institution.  The  provisions 
against  deficiencies  have  not,  however,  repealed  or  impaired  the 
enactment  of  1897  which  controls  the  creation  of  deficiencies.^ 
That  enactment  provides  that  the  state's  officers  or  agents  shall 


^In  1903  the  appropriations  of  the  University  and  the  Agricultural 
and  Mechanical  College  were  itemized,  though  those  of  the  normals 
were  not,  A  failure,  or  refusal,  of  the  legislature  to  itemize  the  uni- 
versity appropriation  for  1915  led  to  the  vetoing  of  the  appropriation 
by  Governor  Colquitt.  The  item  amounted  to  $700,250.  The  state 
Democratic  platform  of  1914  called  for  itemization  of  all  appropriations, 
and  this  was  done  in  the  appropriation  act  of  1915. 

'Art.  4,  sec.  14. 

^Laws  of  1897,  Reg.  Sess.,  p.  46.  Laws  of  1910.  Third  Called  Sess., 
p.  39.    Rev.  Civ.  Stat.,  1911,  art.  4342. 


A  Finayicial  History  of  Texas  381 

at  lea^t  thirty  days  before  a  deficiency  occurs  make  out  a  s^vorn 
estimate  of  the  amount  necessary  to  cover  such  a  deficiency  until 
the  meeting  of  the  next  legislature.  The  estimate  shall  be  filed 
with  the  governor  and  when  approved  by  him  shall  be  filed 
with  the  comptroller.  Fees  and  dues  for  which  the  state  is  liable 
under  general  law, — for  example,  judicial  fees,  are  not  subject  to 
the  provisions  of  this  act;  and  another  exception  is  that  when 
any  injury  or  damage  shall  occur  to  any  public  property  from 
flood,  storm  or  any  unavoidable  cause,  the  estimate  may  be  filed 
at  once.  After  estimates  have  been  filed  and  approved,  de- 
ficiency warrants  shall  be  issued  by  the  comptroller,  and  unless 
there  is  existing  a  deficiency*  appropriation,  the  warrants  shall 
remain  unpaid  until  the  legislature  meets  and  makes  an  appro- 
priation. 

From  1909  to  1913  it  was  incorporated  in  appropriation  acts 
that  any  unexpended  portion  of  an  appropriation  for  one  year 
for  maintenance  and  support,  for  the  erection,  remodeling,  equip- 
ment or  repair  of  buildings  or  for  any  institution  of  the  state 
shall  not  lapse  but  shall  be  available  for  the  following  year. 
There  are  no  permanent  appropriations,  the  constitution  provid- 
ing that  no  appropriation  of  money  may  be  made  for  a  term 
longer  than  two  years.^  The  practice  has  prevailed,  however,  to 
keep    open    unexhausted   appropriations  for   a   longer   period.- 

From  1879  to  1901  the  fiscal  year  ended  August  31,  at  which 
date  the  accounts  of  officers,  departments,  and  institutions  were 
closed  and  report  of  the  transactions  and  activities  of  the  year 
made,  while  the  appropriation  year  ended  February  28.  In 
making  estimates  of  needs  it  was  necessary  to  consider  either  a 
part  of  two  appropriation  years,  or  a  part  of  two  fiscal  years ;  and 
as  the  legislature  was  in  session  as  a  rule  every  two  years  at  the 
close  of  the  appropriation  year  and  as  the  appropriation  bill 
was  usually  passed  at  a  date  later  than  February  28,  it  was  not 
uncommon  for  the  state  government  to  have  to  run  on  credit  until 
the  appropriation  bill  was  passed.^     Despite  complaints  and  the 


^Art.  8,  sec.  6. 

-Report  on  Audit,  Organization  and  Methods,  1909,  p.  151.  The 
practice  was  condemned  in  this  report. 

^In  1897,  for  example,  there  were  no  appropriations  to  pay  state 
expenses  from  March  1  to  June  20. 


382  Bulletin  of  the  University  of  Texas 

regular  biennial  recommendations  by  the  comptroller  for  a  chan^je 
this  situation  was  not  corrected  until  1901,  when  the  appropria- 
tion year  was  made  to  end  August  31,  thus  coinciding  with  the 
tiscal  year/  Recently  it  has  been  advocated  that  the  fiscal  year 
and  the  taxpaying  year  should  be  made  to  coincide  and  they 
both  should  conform  to  the  calendar  year.-  It  is  contended  that 
a  change  of  this  kind  will  prevent  the  recurrence  of  treasury 
deficits.  It  is  difficult  to  see  how  this  would  be  an  inevitable  re- 
sult, unless  the  state  should  adopt  at  the  same  time  the  policy  of 
maintaining  a  large  working  balance  in  the  treasury. 

No  thought  was  taken  until  1907 — or  at  least  none  that  led  to 
any  results — as  to  whether  or  not 'the  state's  business  was  or- 
ganized and  conducted  as  efficiently  as  its  importance  and  magni- 
tude demanded.  In  1907  a  board  of  state  accounting  was  created 
whose  duty  it  was  to  investigate  the  methods  employed  in  ac- 
counting and  transacting  business  in  the  departments  of  the 
state  treasurer,  comptroller,  general  land  office,  and  in  the  peni- 
tentiaries, and  in  other  departments  as  might  be  determined 
upon,  and  to  recommend  changes  in  the  interest  of  economy  and 
efficiency.^  A  firm  of  certified  accountants  was  employed  and 
their  report,  covering  only  the  departments  of  the  treasurer,  the 
comptroller,  and  the  general  land  office,  was  made  under  date  of 
January  22,  1909.  As  a  result  of  their  recommendations,  the 
treasury  department  was  reorganized  and  changes  made  in  the 
general  land  office  in  1909,  and  the  comptroller's  department 
was  reorganized  in  1910.*  The  appropriation  for  the  treasurer 
and  seventeen  clerks  was  $24,270  in  1908 ;  it  was  $11,400  for  the 
treasurer  and  six  clerks  in  1910 ;  for  the  comptroller  and  forty- 
three  clerks  the  appropriation  for  salaries  in  1909  was  $53,745, 
in  1912  it  was  $37,815  for  the  comptroller  and  twenty-eight  clerks. 
The  work  of  the  school  land  department  of  the  treasury  which 


^Laws  of  1901,  Reg.  Sess.,  p.  8.  Report  of  the  State  Revenue  Agent, 
1897-1898.  Before  1879  both  years  ended  August  31,  but  in  order  to 
meet  an  emergency  which  existed  in  1879,  and  which  was  peculiar  to 
that  year  only,  the  appropriation  year  was  made  to  begin  March  1. 
See  Report  of  the  Comptroller,  1884. 

-Report  of  the  State  Treasurer,  1914,  p.  4. 

"Laws  of  1907,  p.  52. 

*Laws  of  1909,  pp.  429,  438.     Laws  of  1910,  Third  Called  Sess.,  p.  37. 


A  Financial  History  of  Texas  383 

engaged  ten  clerks  in  1908  was  transferred  to  the  general  land 
office.  The  force  of  the  general  land  office  in  1908  was  the  com- 
missioner and  forty-nine  clerks,  and  the  salaries  paid  amounted 
to  $63,990;  in  1910  it  was  composed  of  the  commissioner  and 
fifty-three  clerks  and  salaries  paid  were  $69,290.  The  reduction 
in  the  number  of  employees  in  the  comptroller's  department  was 
too  drastic,  however ;  its  new  clerical  strength  was  inadequate  to 
keep  up  with  the  demands  made  upon  it,  and  in  1912  additional 
help  had  to  be  authorized. 

Until  1907  the  rates  of  state  taxation  for  general  revenue  and 
for  public  free  school  purposes  were  fixed  by  the  legislature. 
It  took  into  consideration  the  assessed  values,  the  revenue  from 
other  sources  than  the  ad  valorem  tax,  the  probable  changes  in 
the  assessed  values,  the  cost  and  loss  involved  in  assessment  and 
collection,  and  the  appropriations  for  the  ensuing  two  years.  In 
1907  there  was  established  what  is  known  as  the  Automatic  Tax 
Board  to  which  was  entrusted  the  calculation  of  the  state  rates. ^ 
As  amended  in  1909  the  law  makes  the  governor,  the  comptroller, 
and  the  treasurer  a  board  for  calculating  the  ad  valorem  tax 
for  general  revenue  and  school  purposes.  The  assessors  report 
to  this  board  by  July  15  of  each  year  the  tentative  assessments 
in  their  counties,^  and  the  total  of  these  is  the  base  of  the.  ad 
valorem  taxes.  The  method  of  arriving  at  the  sum  to  be  raised 
is  as  follows :  the  revenue  from  sources  other  than  the  ad  valorem 
tax  for  state  purposes  derived  during  the  first  half  of  the  cur- 
rent calendar  year  and  the  latter  half  of  the  preceding  calendar 
year  is  deducted  from  the  total  of  the  appropriations  for  the 
following  fiscal  year.  The  remainder  plus  20  per  cent  is  then 
divided  by  the  total  of  the  assessed  values,  and  the  quotient 
divided  by  one  hundred  gives  the  general  revenue  rate  in  cents 
on  the  $100  valuation.  The  board  fixes  a  rate  for  public  free 
school  purposes  that  will  produce  $4  per  capita  of  the  children 
within  the  scholastic  age  as  shown  by  the  latest  school  census. 
These  rates  are  then  certified  to  the  assessor.  The  commisioners ' 
courts  are  directed  to  calculate  the  county  rates  wdth  respect 
to  the  taxable  values  shown  by  the  assessment  rolls. 


^Laws  of  1907,  pp.  195,  464.     Laws  of  1909,  p.  371.     Rev.  Civil  Stats. 
1911,  arts.  7351-7353. 


384  Bulletin  of  the  University  of  Texas 

An  obvious  defect  in  this  law  is  that  the  20  per  cent  margin 
is  insufficient  to  cover  the  contingencies  of  large  deficiency  ap- 
propriations, the  fluctuations  in  revenues  from,  other  than  the 
ad  valorem  tax,  and  the  fluctuations  in  the  cost  and  loss  in  the 
assessment  and  collection  of  taxes.  The  poll  tax  is  a  very  un- 
certain source  of  revenue  and  delinquency  in  the  payment  of  the 
ad  valorem  tax  likewise  varies  from  year  to  year.  Thus  the 
per  cent  of  cost  and  loss  to'  assessed  taxes,  including  poll  and 
general  occupation,  was  16.2  in  1910,  23.8  in  1900,  22.3  in  1895, 
and  18.7  in  1891.  Deficiency  appropriations  vary  greatly  from 
session  to  session  and  occur  to  a  degree  that  disarranges  the  best 
laid  plans  of  the  tax  board.  If  the  state  treasury  were  provided 
with  a  good  working  balance,  it  could  be  drawn  upon  in  cases 
of  emergency;  but  as  the  system  now  is  there  is  absolutely  no 
flexibility,  and  the  most  recent  result  was  that  the  state  treasury 
entered  in  March,  1913,  upon  a  disgracefully  long  period  of  de- 
ficiency. There  were  deficiencies  in  the  treasury  under  the  old 
system,  and  to  return  to  it  without  modifications  is  not  to  be 
recommended.  To  the  creditor  of  the  state  there  is  as  little 
choice  between  the  old  and  the  present  one  as  there  is  between 
the  frying  pan  and  the  fire.^  Another  objection  to  the  Auto- 
matic Tax  Law  is  that  it  makes  it  possible  for  the  governor  to 
play  politics  with  the  tax  rate.  By  vetoing  appropriations,  and 
with  no  opportunity  for  the  legislature  to  pass  them  over  his 
veto,  he  is  able  to  manipulate  the  rate  with  a  view  to  its  effect 
on  his  future  political  ambitions.  On  the  whole,  however,  the 
new  arrangement  is  superior  to  the  old.  Its  purpose  is  a  more 
careful  determination  of  the  tax  rate,  and  if  the  treasury  had  ^ 
greater  power  in  providing  for  emergencies  there  would  be  no 
deficits.  Some  curbing  of  the  gubernatorial  veto  power  would 
meet  the  last  objection  to  the  law. 


'Governor  Colquitt  criticized  the  law  in  his  messages  of  February 
22  and  July  31,  1911,  as  unconstitutional  in  that  it  delegated  to  a 
board  a  legislative  function. 


Chapter  17. 


CONCLUSION. 


Attention  may  now  be  directed  to  some  of  the  financial  needs 
of  the  state.  The  growing  importance  of  government  is  shown 
in  Texas  in  the  growth  of  state  expendit^ures.  Though  there  is 
complaint  about  public  expenditures,  Tex^s  is  not  doing  as  much 
as  some  other  states  in  proportion  to  her  ability.  The  following 
table,  compiled  from  the  United  States  Census,  shows  the  rela- 
tive standing  of  some  selected  states  in  1913,  and  the  amounts 
given  are  the  combined  expenditures  of  the  state,  counties,  towns 
and  other  local  subdivisions  per  $1,000  of  taxable  wealth  at  its 
full  or  true  value. 


Con- 
servation, 
Sanitation, 
and  Public 
Healtli 


I  Education, 
Charitable   I    Libraries, 

and         I         and 
Correctional!   Recreation 


Highways 


Protection 

to  Persons 

and 

Property 


California   .— 
Massachusetts 

Tennessee 

Wisconsin    ._. 

New    York 

Georgia    

Missouri   

Colorado   

Texas    

Oklahoma    _  — 


Complaints  as  to  expenditures  are  in  some  cases  unintelligent 
and  are  mouthed  about  for  political  effect,  but  in  the  majority 
of  instances  the  complaints  do  not  so  much  represent  antipathy 
to  the  purposes  of  the  expenditures  as  they  do  dissatisfaction 
with  the  revenue  system  and  public  officials.  By  reason  of  the 
breakdown  of  the  general  property  tax,  the  weight  of  taxation 
falls  increasingly  on  the  owners  of  real  property,  until  in  the 
cities  the  description  of  taxes  as  burdens  is  not  inappropriate. 
Real  property  owners  feel  that  there  is  injustice  in  this,  and  con- 
sequently oppose  propovsals  which  will  mean  additional  taxation 
whose  benefits  are  not  obvious,  immediate,  and  personal.  Public 
officials  are  too  frequently  looked  upon  as  mere  ' '  office-holders, ' ' 
and  there  is  lack  of  confidence  in  their  ability  to  get  for  the 


25— H 


•386  Bulletin  of  the  University  of  Texas 

public  the  most  out  of  the  money  raised  for  public  use.  The  two 
greatest  financial  problems  which  Texas  has  are  to  secure  an 
equitable  system  of  taxation  and  an  efficient  body  of  administra- 
tors. These  are  the  problems  of  orovernment  in  all  of  the  Amer- 
ican states  and  cities,  but  Texas  has  been  more  indifferent  to- 
ward them  than  have  many  other  states. 

The  present  state  constitution  is  becoming  a  patchw^ork,  and 
an  entirely  new  one  should  be  framed.  The  constitutional  pro- 
visions relating  to  taxat^ion,  the  public  debt,  and  the  selection  and 
compensation  of  public  officials  wxre  laid  down  in  1875.  At  that 
time  intangible  personal  property  was  relatively  less  important 
than  it  is  now,  the  corporation  was  not  as  great  a  factor  as  at 
present,  the  urban  element  in  the  population  was  much  smaller 
than  now,  and  the  conditions  generally  for  the  successful  opera- 
tion of  the  general  property  tax  were,  while  bad  enough,  more 
favorable  than  they  now  are.  In  that  year  also,  owing  to  the 
•effects  of  the  Civil  War,  the  Reconstruction,  and  the  panic  of 
1873,  economy  of  the  narrow^est  kind,  in  both  public  and  private 
affairs,  was  a  grinding  necessity,  and  this  w^as  reflected  in  the 
binding  restrictions  upon  the  taxing  and  debt  creating  powers 
of  the  state  government.  In  continuing  to  adhere  to  the  general 
property  tax,  with  its  uniform  rate  upon  all  classes  of  property 
and  with  its  decentralized  system  of  administration,  Texas  is  in 
the  rearguard  of  the  American  states  as  respects  methods  of  tax- 
ation. It  is  almost  incomprehensible  that  in  this  year  of  the 
twentieth  century  there  should  be  a  state  in  which  the  compli- 
cated properties  of  railroads  are  assessed  for  the  most  part  in 
piecemeal  by  local  assessors,  and  in  which  there  is  no  state  super- 
vision of  these  assessors  in  their  assessment  of  the  property  of 
either  individuals  or  corporations. 

Various  proposals  have  been  made  in  and  out  of  the  legislature 
to  cure  the  evils  complained  of.  As  a  remedy  for  the  varying 
proportions  of  assessed  to  true  values  among  the  counties  separa- 
tion of  state  and  local  revenues  has  been  more  advocated  in 
Texas  than  h^  any  other  remedy.  Only  the  complete  withdrawal 
of  the  state  from  the  taxation  of  real  estate  would  make  this 
remedy  effective  against  the  particular  defect  of  the  tax  system 
to  which  it  is  applicable,  but  in  view^  of  state  support  of  the 
public  free  schools,  and  the  desirabilitv  of  the  continuance  and 


A  Financial  History  of  Texas  387 

extension  of  snch  support,  abandonment  of  the  real  estate  tax 
by  the  state  does  not  seem  likely.  Separation  of  sonrees  of 
revenue  is  not  a  reform  measure  which  is  employed  to  any  great 
extent  by  other  states,  and  the  tendency  seems  to  be  away  from 
it  rather  than  towards  it.  Even  if  it  were  a  desirable  reform 
measure  for  Texas,  it  would  not  be  possible  without  a  constitu- 
tional amendment. 

If  the  property  tax  is  retained  as  a  state  tax,  some  system  of 
state  control  over  assessments  should  be  adopted.  Decentraliza- 
tion of  administration  has  failed  in  taxation  in  Texas  as  it  failed 
in  the  administration  of  the  public  lands.  Centralization  should 
succeed  decentralization,  and  the  state  board  or  commission 
should  have  the  power  to  supervise  asseSvSments  of  property  for 
state  taxation,  should  have  authority  over  assessors  and  col- 
lectors, and  should  assess  the  property  of  corporations  which, 
like  railroads,  express  companies,  telegraph  and  telephone  com- 
vpanies,  do  a  state-wide  business.  The  present  state  tax  board 
is  deficient  in  power  and  is  w^rongly  constituted. 

A  central  tax  board  or  commission  wnll  not  remedy  the  evil 
of  the  escape  of  personal  property,  especially  of  intangible  per- 
sonalty, from  taxation.  The  weakness  of  the  system  which  em- 
ploys property  as  an  index  of  ability  to  pay  taxes  is  nowhere 
better  exhibited  than  in  connection  with  the  taxation  of  per- 
sonal property.  Some  of  it  should  not  be  subject  to  taxation 
at  all,  for  there  results  therefrom  a  vicious  variety  of  double 
taxation.  The  taxation  of  vendor's  lien  notes  and  of  the  prop- 
erty which  secures  them,  for  example,  is  double  taxation  of  an 
indefensible  kind.  Texas  avoids  similar  double  taxation  in  other 
eases;  thus  the  shares  of  stock  of  domestic  corporations  are  not 
liable  to  assessment  when  the  property  of  the  corporation  is 
subject  to  assessment  in  the  state,  and  there  is  no  double  taxation 
of  bafik  stock  and  bank  property.  The  Texas  laws  do  not  carry 
out  the  principle  of  exemption  to  its  logical  conclusion,  for  there 
is  no  valid  reason  for  treating  differently  stocks  on  the  one 
hand,  and  bonds  and  credits,  such  as  vendor's  lien  rotes,  on  the 
other.  An  interesting-  situation  will  exist  as  a  result  of  the  pro- 
vision in  the  Federal  Farm  Loan  Act  which  exempts  from  Fed- 
eral, state  and  other  taxation  any  mortgage  executed  to  a  Fed- 


388  Bulletin  of  the  University  of  Texas 

eral  land  bank.     If  this  exemption  provision  stands,  some  farm 
mortgages  will  be  taxable  while  others  will  be  exempt. 

Property  as  a  measure  of  ability  to  pay  taxes  is  inferior  to 
income,  and  tax  systems  will  work  injustice  until  income  takes 
the  place  of  property  as  a  basis.  An  income  tax  should  dis- 
tinguish between  income  from  property  and  income  from  per- 
sonal exertion,  and,  in  accordance  with  modern  notions  of  jus- 
tice in  taxation,  the  former  and  all  funded  income  should  be 
taxed  at  a  higher  rate  than  the  latter.  Real  property  should  also 
continue  to  be  liable  for  special  assessment  for  improvements 
which  are  directly  beneficial  to  it,  and  a  moderate  use  of  the 
land  increment  tax  would  be  in  accord  with  modern  tendencies. 
The  greatest  obstacle  to  income  taxation  in  the  United  States 
is  inefficient  administration,  but  Wisconsin  is  setting  an  ex- 
ample to  the  other  states  with  her  central  supervisory  board  and 
her  district  assessors  appointed  according  to  the  merit  system. 
The  assessors  should  be  removed  from  local  influences,  but  they 
should  have  the  benefit  of  the  knowledge  of  local  boards.  There 
should  be  co-operation  between  the  state  and  national  govern- 
ments in  the  assessment  of  the  income  tax,  and  there  should  be 
a  division  of  the  yield  of  the  tax  between  the  state  and  local 
governments. 

The  constitution  of  Texas  provides  for  an  income  tax,  but  in 
general  the  tax  provisions  of  the  constitution  are  obsolete.  They 
do  not  permit  separation  of  sources,  or  classification  of  property 
for  purposes  of  taxation,  or  state  supervision  of  assessment,  or 
other  methods  of  tax  reforms  which  have  been  employed  by  the 
states  of  the  United  States  and  foreign  countries.  Another  tax 
reform  which  has  been  advocated  in  Texas  is  ''home  rule"  or 
"local  option"  in  taxation.  This  would  permit  towns  and  cities 
to  adopt  such  taxes  as  they  saw  fit.  The  state  cannot  afford  to 
disassociate  itself  from  all  concern  with  local  taxation,  q^  this 
reform  proposes,  and  for  the  reason  principally  that  it  must 
protect  its  own  sources  of  revenue.  Those  proposing  this  reform 
are,  as  a  rule,  single  taxers  or  advocates  of  partial  exemption  of 
improvements  from  taxation,  neither  of  which  proposals  is  just 
in  the  eyes  of  those  who  believe  that  every  person  should  con- 
tribute to  the  support  of  the  government  in  accordance  with 
his  ability,  and  that  income  is  the  best  index  of  ability.     The 


A  Financial  History  of  Texas  389 

single  tax  is  not  a  tax  measure,  but  is  a  social  reform  measure 
which  includes  the  feature  of  government  confiscation  of  the 
rent  of  land.  It  is  not  to  be  judged,  therefore,  as  a  fiscal  meas- 
ure, but  those  who  insist  that  it  should  be  so  judged  must  meet 
the  objections  that  it  is  a  confiscatory  measure  and  that  the 
concept  of  income  as  a  basis  for  taxation  is  more  comprehensive, 
just,  and  adequate. 

The  exemption  of  the  homestead  from  taxation  is  another 
proposed  reform.  The  homestead  law  of  Texas  is  already  too 
liberal  without  this  addition.  Under  a  system  of  taxation  in 
which  the  income  tax  is  the  principal  tax  and  the  property  tax 
is  a  supplementary  tax,  it  might  be  desirable  to  exempt  real 
property  up  to  a  certain  amount,  but  exemption  under  any 
other  condition  would  be  difficult  to  defend.  Under  the  exist- 
ing methods  of  taxation  in  Texas  the  small  property  owner  is 
undoubtedly  discriminated  against,  but  the  remedy  is  not  the 
exemption  of  his  homestead,  but  it  is,  so  long  as  the  property  tax 
is  retained,  the  fuller  taxation  of  the  larger  owner  and  the  aband- 
onment of  the  discrimination  in  favor  of  acreage  property  and 
vacant  lots. 

The  provisions  of  the  Texas  constitution  relating  to  the  state 
debt  reflect  the  political,  economic,  and  financial  conditions 
which  existed  in  1875.  Distrust  of  the  legislative  and  executive 
branches  of  the  government  is  shown  in  the  small  amount  of  debt 
which  may  be  incurred,  except  under  extraordinary  conditions  of 
war,  insurrection,  or  invasion.  This  amount,  $200,000,  reflects 
also  the  hard  times  existing  in  1875.  There  should  be  some 
provision  against  the  frequent  deficits  in  the  treasury  which 
work  such  hardships  upon  the  employees  and  creditors  of  the 
state.  Authority  should  be  given  the  treasury  to  make  temporary 
loans  to  an  amount  sufficient  to  avoid  deficiencies,  or  the  war- 
rants of  the  state  should  draw  interest  until  they  are  called  for 
payment. 

A  more  sensible  sj^stem  of  appropriations  should  be  adopted, 
and  to  this  end  the  governor  and  representatives  of  both  branches 
of  the  legislature  should  act  together  as  a  budget  council  or  com- 
mittee in  arriving  at  the  needs  of  the  various  institutions  and 
departments  of  the  public  service,  in  estimating  the  future 
revenue,  and  in  framing  the  appropriation  measure.     The  re- 


390  Bulletin  of  the  University  of  Texas 

suit  of  their  work  would  be  a  budget  which  should  be  submitted 
to  the  legislature,  and  there  should  be  limitations  in  the  changes 
which  the  legislature  might  make  and  on  the  veto  powers  of 
the  governor.  There  certainly  should  be  a  change  from  the  ex- 
isting arrangement  under  which  the  appropriation  measure  is 
one  of  the  last  measures  to  pass  the  legislatiire  before  final  ad- 
journment, with  the  result  that  the  governor's  veto  of  items 
goes  unchallenged. 

However  laudable  the  purposes  of  public  expenditures  and 
however  generous  the  provision  for  them,  there  will  be  waste 
and  ineffective  service,  unless  the  public  officials  are  honest  and 
capable.  There  will  never  be  satisfactory  public  officials  until 
the  ''spoils  system"  is  done  away  with,  and  the  public  service 
is  looked  upon  as  a  profession.  Those  who  follow  this  profes- 
sion should  be  trained  for  it,  they  should  be  chosen  for  their 
fitness,  and  they  should  have  security  of  tenure.  The  accounts 
of  public  officials  who  handle  public  funds  should  be  regularly 
audited,  and  for  this  work  an  expert  force  of  auditors  is  neces- 
sary. These  auditors  might  also  be  expected  to  study  methods 
of  organiaztion  and  conduct  of  the  public  business. 

In  conclusion,  it  may  be  observed  that  the  responsibility  for 
the  shortcomings  of  the  financial  system  and  of  government  gen- 
erally and  the  hope  of  their  betterment  lie  with  the  average  citi- 
zen. He  has  no  one  to  blame  but  himself,  and  there  will  be  no 
important  reform  until  he  ceases  to  be  individualistic,  ignorant,, 
and  indifferent  as  regards  public  affairs. 


APPENDIX. 


TABIiZ:    1. 

Revenues  of  the  Republic. 

Direct 
Taxes 

(Tustoms 

Licenses 

Land  and 
Land  Dues 

Mis- 
cellaneous 

nrotal 

1836-1838— 
1839— 

1840 

1841— 

1842-1844- _. 

$        100,455 

58J30 

179.503 

80,335 

27,561 

$        133.649 
122.169 
164,789 
K)1.990 
3W,177 
340,306 



_             — -_- 

42.686 
16,503 
15,140 

$            21,123 

218^250 

68,025 

$               5.552 

65.621 

141 

429 

502 

1,815 

$           260.780' 
187.791 
453,235 
442,63& 
157,51* 

1844-1846 



385,02$ 

TABI.E  2. 

Expenditures  of  the  Republic. 


1836 $    495,295 

1837 945,961 

1838 831 ,401 

1839 1,504,173 

1840 2,174,752 

1841 1 ,176,288 

1842 198,051 

1843 147,274 

1844 1J7,850 

1S45 243,5.38 


TABI.E   3. 
Classified  Appropriations  of  the  Republic. 


1836- 

TABtE   4. 
Public  Debt  of  the  Republic. 
$l,'>50,000      ■ 

TABLE 

Treasury  Note 

1838 

1830 

1      1840 

!      1841 

i      1846 

5. 
Circu 

lation. 

$    684, Oe9' 

1837- 

1838 

1 ,090,984 

1,886,425 

„_.  2,013,762 
—  _  3,287,962 
_—  2,920,860 
.—  2,674.44r 

1839. 
1840. 
1841- 

3,855,900 

6,241,409      i 

7,446,740      1 

1846. 

9,949,007      ' 

392  Bulletin  of  the  Universiti/  of  Texas 


Explanatory  Notes,  Table  1. 

The  sources  from  which  the  statistics  for  revenues  are  drawn 
do  not  always  make  clear  whether  the  receipts  are  gross  or  net. 
The  amounts  given  in  Table  1  are  net  as  nearly  as  it  is  possible 
to  obtain  them.  The  period  covered  is  from  September  30, 
1836,  to  January  1,  1846. 

The  amount  given  for  direct  taxes  for  the  three  years  ending 
September  30,  1838,  includes  some  receipts  from  land  dues  and 
license  taxes,  while  the  amount  given  for  land  and  land  dues 
includes  some  license  taxes.  Miscellaneous  for  the  year  ending 
September  30,  1839,  includes  direct  taxes,  land  and  land  dues, 
and  license  taxes. 

Explanatory  Notes,  Table  2. 

The  statistics  for  1836  and  1837  are  the  amounts  of  warrants 
•drawn  during  the  calendar  years ;  those  for  other  years  are  for 
the  fiscal  years  ending  September  30, 

Explanatory  Notes,  Table  4. 

1836.  Morfit  to  Forsyth,  September  4,  1836,  in  House  Ex- 
ecutive Document,  24th  Congress.  Second  Session,  No.  35. 

1837.  Gouge,  Fiscal  History  of  Texas,  p.  73.  Yoakum  (Ilis- 
tory  of  Texas,  Vol.  II,  p.  218)  says  about  $1,000,000  of  unaudited 
claims  should  be  added. 

1838.  Report  of  the  Secretary  of  the  Treasury,  September  30, 
1838,  as  published  in  the  Telegraph  and  Texas  Register,  Novem- 
ber 17,  1838.  The  amount  of  this  debt  was  made  up  as  follows : 
audited  claims,  $775,255;  funded  debt.  $427,100;  treasury  notfs 
in  circulation,  $684,069.  Unaudited  claims  are  not  mentioned 
Jin  the  report  of  the  secretary. 

1839.  Report  of  the  Secretary  of  the  Treasury,  September 
30,  1839,  as  published  in  the  Telegraph  and  Texas  Register, 
December  18,  1839.  This  amount  is  made  up  as  follows :  funded 
debt,  $738,019 ;  naval  debt,  $755,907 :  treasury  notes,  $2.013,762 ; 
audited  claims,  $348,241. 


A  Financial  Historij  of  Texas  393 

1840.  Gouge,  Fiscal  History  of  Texas,  p.  275.  To  the  amount 
given  by  Gouge  is  added  the  principal  of  the  naval  debt.  Ac- 
crued interest  on  liabilities  is  not  included  because  no  statement 
of  the  amount  of  it  is  anywhere  given.  The  debt  was  made  up 
as  follows :  funded  debt,  $1,617,069 :  treasury  notes  and  eight 
per  cent  bonds  in  circulation,  $3,387,962;  loan  from  the  Pennsyl- 
vania Bank  of  the  United  States,  $305,261;  naval  debt,  $755,- 
907;  audited  claims,  $175,209. 

1841.  Report  of  the  Secretary  of  the  Treasury,  September 
30,  1841,  as  published  in  the  Telegraph  and  Texas  Register, 
December  15,  1841,  gives  a  total  of  $5,782,788;  Gouge  (p.  275) 
gives  $7,704,328.  The  amount  in  Table  4  is  compiled  from  both 
sources,  and  is  made  up  as  follows:  funded  debt,  $1,672,300; 
treasury  notes  and  eight  per  cent  bonds  in  circulation,  $3,770,760; 
loan  from  the  Pennsylvania  Bank  of  the  United  States,  exclusive 
of  accrued  interest,  $310,037 ;  audited  claims,  $193,643 ;  estimated 
naval  debt,  $1,000,000;  estimated  unaudited  claims,  $500,000. 
The  last  two  estimates  are  those  given  by  the  secretary  of  the 
treasury. 

1846.  Statement  of  the  comptroller,  March  28,  1846.  The 
amount  is  made  up  as  follows :  funded  debt,  $2,486,800 ;  treasury 
notes,  $2,674,447;  loan  from  the  Pennsylvania  Bank  of  the 
United  States,  $400,000;  naval  debt,  $740,029;  audited  clai;ns, 
$156,905 ;  estimated  unaudited  claims,  $822,000 ;  accrued  interest 
on  liabilities,  $2,668,824. 


;^9^ 


Bulletin  of  the  University  of  Texas 


TABI.X:   6. 
Retail  Prices  in  the  Houston  (Texas)  Market. 

(Compiled  from  the  Telegraph  and  Texas  Register.) 


Aug.       Sept.  I    Dec. 
19,  1837    1,  1838  25,  1839 


Bacon,    per  lb._.  $ 
Coffee,   per  lb. .-I 

Corn,  per  bu 

Flour,  per  bbl... 

Lard,  per  lb 

Rice,    per   lb 

Sugar,    per   lb... 

Nails,  per  lb 

Lumber,    per   m. 


.20 


30.00 
.20 
.12 
.20 


70.00 


.$      .18  !$      .50 
.45 
4.00 
30.00 
.75 
.30 
.42 
.35 
110. OO 


1.50 
20.00 
.18 
.20 
.17 
.18 
75.00 


Sept.       Oct.       Sept.   1   Aug.    I   Aug. 
9,  1840   6,  184114,  1842  30,  1843  28,  1844 


.16 

.17 

1.35 

10.00 


.08 
.125 

30.00 


.15 
.16 
.75 

11.00 
.14 
.06 
.10 
.10 

30.00 


.10 

.15 

1.30 

11.00 

.12 


.10 
30.00 


.09 
.15 
.875 
8.00 
.125 
.06  I 


.105 
.375 
8.00 
.125 
.08 


.10    

18.00       18.00 


3,  1845 


.125 
1.00 
8.00 

.09 


18.00 


A  FDiaiiclal  History  of  Texas 


395 


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iMiiMitiitiM^^-^iii 


A  Financial  History  of  Texas  397 


Explanatory  Notes,  Table  7. 

This  table  is  intended  to  approximate  as  nearly  as  is  possible 
a  classification  of  the  total  expenditures  of  the  state.  The  class- 
ification is  only  an  approximate  one,  because  of  the  failure  of 
the  financial  reports  of  the  state  to  give  a  classification  of  the 
expenditures  of  the  general  revenue  fund.  There  is  in  the 
report  of  the  comptroller  a  classification  of  the  warrants  drawn 
on  the  general  revenue  fund,  but  there  is  nowhere  any  classifi- 
cation of  warrants  paid.  The  amount  of  warrants  drawn  dur- 
ing the  fiscal  year  rarely  coincides  with  the  amount  of  war- 
rants paid,  so  that  a  classification  of  the  former  is  not  the  equiv- 
alent of  a  classification  of  the  latter.  The  classification  of  war- 
rants drawn  is,  however,  the  nearest  one  can  come  to  a  classi- 
fication of  the  expenditures  of  the  general  revenue  fund,  and  in 
this  table  that  classification  is  adopted.  As  the  expenditures  of 
the  general  revenue  fund  are  only  a  part  of  the  total  expendi- 
tures of  the  state,  it  is  necessary  in  order  to  get  the  total 
to  add  to  the  amount  of  warrants  drawn  on  the  general  revenue 
fund  the  expenditures  of  the  available  school,  the  available 
university,  the  Agricultural  and  Mechanical  College  and  the 
other  active  funds.  Table  7  is  thus  a  hybrid  of  warrants  drawn 
on  the  general  revenue  fund  and  of  warrants  paid  by  the  other 
active  funds. 

Until  1883  there  is  in  the  report  of  the  comptroller  no  classi- 
fied summary  of  the  warrants  drawn  upon  the  general  revenue 
fund,  and  it  was  necessary,  therefore,  to  compile  the  classifica- 
tions. The  normal  difficulties  of  the  task  were  increased  by  the 
typographical  errors  of  the  reports.  Because  of  these  errors 
the  total  of  the  items  after  classification  did  not  agree  in  many 
instances  with  the  total  given  in  the  report.  In  Table  7  the 
total  used  is  that  given  in  the  report  of  the  comptroller,  and 
not  the  one  ascertained  by  the  writer,  and  for  this  reason  the 
total  in  the  last  column  is  not  in  some  instances  the  sum  of 
amounts  in  the  preceding  columns.  Beginning  with  1883  the 
summary  of  the  warrants  drawn  which  is  found  in  each  report 
of  the  comptroller  is  used. 


398  Bidletin  of  the  Universify  of  Texas 

From  1848  to  1860  the  classifications  arc  of  biennial  statements 
of  warrants  drawn,  but  beginnino-  with  1868  the  classitications 
are  of  annual  statements.  There  are  no  classifications  ol)tainable 
for  1847,  1860,  1861,  1862,  and  1863.  The  statement  for  1863- 
1865  is  for  more  than  one  fiscal  year  and  for  less  than  two. 
and  that  for  1865-1866  is   for  less  than  one  year. 

The  table  is  incomplete  by  reason  of  the  omission  of  the  peni- 
tentiary expenditures  and  of  certain  expenditures  by  the  Agri- 
cultural and  Mechanical  College.  The  only  penitentiary  expen- 
ditures included  are  those  out  of  the  general  revenue  fund  of  the 
state.  The  accounts  of  the  agricultural  and  industrial  opera- 
tions of  the  penitentiary  have  not  been  published  in  a  form  that 
made  possible  their  incorporation  here.  The  Agricultural  and 
Mechanical  College  receives  certain  moneys  from  the  Federal 
government  and  under  laws  of  the  state  regulating  feedstuffs 
and  fertilizers  which  are  not  accounted  for  in  the  reports  either 
of  the  state  comptroller  or  of  the  state  treasurer  or  of  the  Col- 
lege. Some  of  these  funds  appear  every  other  year  in  the  reports 
of  the  state  treasurer. 


A  Financial  History  of  Texas 


81)9 


TABZ.I:   8. 

Net  Expenditures. 


Year 


Genera]  Fund 


1847- 
18-18- 
1849- 
1850- 
1851- 
1852. 
18.53. 
1854. 
1855- 
1856. 
1857. 
1858- 
185<>- 
■i860_ 
1861. 
18(i2- 
1863. 
1864- 
1865- 
ISSfi- 
1867- 
1868- 
186<>. 
1870. 
1871- 
1872- 
187:^. 
1874. 
1875- 
1876- 
1877- 
1878- 
1879. 
1880- 
1881- 

1883- 
1884. 
1885- 
1886. 
1887. 
1888. 
1889. 
1890. 
1891- 
1892. 
1883- 
1894- 
1895- 
1896- 
1897. 
1898. 
1899. 
190O. 
1901. 
1902. 
1903, 
1904. 
1905- 
1906. 
1907- 
1908. 
1909. 
.1910- 
1911. 
1912. 
1913- 
1914- 
1915- 


Avallable 
School 
Ftind 


Available 

University 

Ftinds 


127,677 

115,972 

82,232 

148,055 

115,372 

1,282,578 

460,405 

474,245' 

241,379 

593,642 

279,427 

644,604 

370,346 

718,616 

467,082 

998,809 

1,039,998 

1 ,775,085 

600,997 

233,089 

479,-528 

349,968 

370,792 

.599,155 

581,415 

940,598 

936,370 

1,236,043 

1,125,688 

1,091,-571 

1,250,496 

1 ,224,739 

1,446,636 

1,342,794 

1,434,918 

2,4.31,389 

1,911,332 

1,730,068 

1,841,698 

1,565,904 

1,916,315 

2,057,221 

2,265,879 

1,908.727 

2,080,909 

2,-552,1-56 

2,376,811 

2,146,832 

1,991,091 

2,843,876 

2,2-54,228 

2,153,650 

2,376,054 

2,732,8-56 

2,804,296 

3,183,717 

3,405,688 

3,562,971 

3,115,072 

4,175,422 

3,561,743 

3,805,694 

4,148,157 

4,862,098 

4,628,198 

5,n9,.'>53 

5,347,845 

6,998,816 

7,103,213 


All  Other 

Funds 


27,136. 
95,130. 

106,125;. 

105,332  . 

118,465,. 

110,100'. 

110,5111. 
50,954- 
24, 697  j- 
23,734. 
10,850  . 


1,416 


3,210  .. 
61,060!.. 
32,771  - 

497,238.. 

194,904.. 

790,121  -. 

620,205,-. 

609,841  _. 

499,185  .. 

682,4801- 

983,689L. 

733,559.. 

790,577,-. 

913.750!? 
1,148,835 
1,485,549 
1,956,025 
2,420,986 
2,265,937 
2,544,728 
2,205,3.^0 
2,303,562 
2,609,648 
2,-5-^5.047 
3,052,589 
2,432,604 
2,544,066 
2,902,-562 
3,233,289 
3,069,912 
3,232,445 
3,081.471 
3,488,261 
3,564,498 
3,809,640 
3,848,584 
3,971,922 
4,218,3a3 
4,388,254 
5,389,944 
5,658,473 
6,507,075 
6,308,287 
6,783,459 
7.0-53,4S7 
7,348,823 
7,692,144 


15,140 
46,827 

121,792 
61,412 
63,821 
64,062 
53,245 

116,067 
90,914 
90,716 
94,064 
68,427 
60,480 
44,706 
.56,598 

83,087 
101,429 
105,607 
98,52» 
44,736 
171,681 
135,502 
129,405 
136,229 
194,827 
160,566 
154,489 
127,731 
223,386 
198,103 
221 ,203 
118,293 
321,950 


6,000 
46,586 
40,502 
72,696: 


913 


90,956 


272,688 
198,138 
121,451 i 
468,646 
199,323 
514,936 


26,W& 

878,483 
236,012 
394,431 
568,562 
66,321 
125,560 
19,119 
32,833 
37,607 
40,743 
32,229 
124,525 
48,469 
51,296 
57,623 
44,118 
18,009 
24,135 
19,964 
18,440 
21 ,814 
17,114 
14,254 
14,676 
10,618 
13,319 
-57,-516 
23,975 
44.067 


77,673 
33,762 
20,724 
23,. 390 
842,291 
1,573,111 


Total 


127.677 

115,072 

82,232 

143, 05-^ 

115,372 

1,282,578 

460,405 

474,245 

268,516 

688,772 

385,552 

749,936 

488,81? 

828,726 

577,593 

1,0.55,773 

1,111,281 

1,8;39,323 

684,545 

233,089 

481,858 

.  352,051 

464,9.59 

660,2-5 

886,874 

1,633,975 

1,252,726 

2,494,812 

1,945,216 

2,216,349 

1,749,681 

1,907,220 

2,351,000 

2,t>22.342 

2,349,973 

3,747,246 

3,509,353 

3,253,114 

3,802,002 

3,872,647 

4,111,603 

4,520,485 

4,458,663 

4,162,960 

4,722,623 

5,0.55,922 

5,385,541 

4,525,-500 

4,438,029 

5,-5.57,803 

5.389,075 

5,140.261 

5,542,216 

5,7.54,218 

6,220,642 

6,619,264 

7,212,991 

7,372,131 

7,047,565 

8,-385.447 

7,956,769 

9,257,356 

9,829,333 

10,868,-388 

11,052,088 

11,969,594 

12,581,080 

15,113,188 

10,. 5.59, 84  4 


400  Bulletin  of  the  University  of  Texas 


Explanatory  Notes,  Table  8. 

In  tlie  construction  of  this  table  there  is  included  among  the 
expenditures  of  the  general  fund  the  interest  paid  on  state  bonds 
held  by  the  special  funds;  but  this  interest  is  not  included  in 
the  total.  This  explains  why  the  amount  in  the  ' '  total  column ' ' 
is  not  the  sum  of  the  amounts  in  the  preceding  columns.  Trans- 
fers among  the  funds  are  the  principal  items  excluded  in  ar- 
riving at  net  expenditures.  Refunds  should  also  be  deducted, 
but  these  are  rarely  itemized  in  the  reports.  Under  available 
university  funds  are  included  the  available  fund  proper  and  the 
endowment  and  available  funds  of  the  medical  branch. 

1877-1878.  The  item  of  interest  on  state  bonds  held  by  the 
school  and  other  special  funds  in  the  treasury  first  appears  in 
the  financial  report  of  1877-1878.  In  the  biennial  report  of 
the  comptroller  for  these  years  the  receipts  and  expenditures  of 
the  special  funds,  except  the  available  school  fund,  are  not  given 
by  years  and,  in  the  case  of  the  available  school  fund,  the 
receipts  from  interest  on  state  bonds  are  not  separated  from 
those  from  interest  on  other  bonds.  The  total  net  expenditures 
of  the  accounts  for  which  there  are  not  separate  3'early  state- 
ments were  $251,555.76,  and  of  this  amount  $194,453.39  was 
for  the  payment  of  debt.  These  funds  received  as  interest  on 
state  bonds  $61,143.33  in  cash  and  $35,000  in  state  bonds.  The 
net  expenditures  of  these  funds  are  not  included  in  this  table, 
for  the  reason  that  they  cannot  be  ascertained. 

The  amounts  of  interest  on  state  bonds  Avhich  are  included 
among  the  net  expenditures  of  the  general  revenue  fund  and 
excluded  from  the  total  for  all  the  funds  Avere  by  years  as 
follows : 

1879     $105,804  1889     ; 169,357 

1880     32,495  1890     172,473 

1881     111,535  1891    183,176 

1882    : 1892    173,815 

1883  166,605  1893    163,583 

1884  150,617  1894    172,040 

1885  182,694  L895     185,453 

1886  197,184  1896    262,742 

1887  167,.545  1897    185,616 

1888  172,317  1898    185,853 


A  Financial  Ilistorij  of  Texas  401 

1S99  186,153  1908  142,916 

1900  186,530  1909  131,786 

1901  187,550  1910  206,190 

1902 187,942  1911  >. .  101,547 

1903  188.695  1912  152,246 

1904  185,545  1913  64,845 

1905  182,155  1914  194,536 

1906  202,105  1915  130,575. 

1*907  212,032 

1881.  $73,898.57  expended  by  the  university  land  sales  ac- 
count for  bonds  is  not  included  in  this  table. 

1882.  In  the  available  school  fund  interest  from  state  bonds 
is  not  separated  from  interest  from  other  bonds.  Only  $37,465^ 
of  interest  received  by  other  funds  is  deducted. 

1895.  Included  amon^r  the  university  expenditures  is  a 
transfer  of  $500  to  the  Agricultural  and  Mechanical  College 
fund;  but  the  amount  is  excluded  from  total  expenditures. 
Five  hundred  dollars  was  transferred  in  each  of  the  years  1896^ 
1897,  and  1898,  and  $1,000  in  1900,  and  they  were  treated  as 
above. 

1909.  The  condensed  character  of  the  report  of  the  comp- 
troller renders  it  nearly  useless  as  an  exhibit  of  the  financial 
operations  of  the  state  government.  Omitted  from  it  are  the 
statements  of  all  funds,  except  the  general  revenue,  the  avail- 
able school,  and  the  permanent  school  funds.  These  omissions 
make  it  impossible  to  state  completely  net  expenditures.  The 
statistics  for  the  available  university  fund  are  taken  from  the 
report  of  the  board  of  regents  for  1909-1910. 

1914.  The  report  of  the  comptroller  for  1914  is  so  poorly 
compiled  that  it  is  impossible  to  ascertain  from  it  the  amount 
of  interest  on  state  bonds  received  by  the  different  trust  funds 
of  the  treasury.  The  amounts  were  obtained  directly  from  the 
comptroller's  office.  The  large  increase  in  the  amount  of  ''all 
other  funds"  was  due  to  the  pension  fund.  Under  all  other 
funds  is  included  $48,153.14  transferred  from  the^pure  feed 
fund  to  the  Agricultural  and  Mechanical  College.  The  pure  feed 
fund  appears  only  in  the  report  of  the  state  treasurer,  and  as 
this  report  appears  only  every  other  year  and  covers  only  the 
year  in  which  it  appears,  the  statistics  for  this  fund  are  obtain- 
able only  occasionally.     The  fact  that  this  fund  and  that  of 


26— H 


402  Bulletin  of  the  University  of  Texas 

the  prison  commission  are  found  only  in  the  treasurer's  report 
and  the  further  fact  that  the  treasurer's  report  covering  one 
year  is  published  only  every  other  year,  while  the  report  of  the 
Agricultural  and  Mechanical  College  does  not  contain  an  itemi- 
zation of  receipts,  show  the  lack  of  system  in  making  public 
the  state's  financial  operations. 

1915.  Included  under  ''all  other  funds"  is  $77,964.18  trans- 
ferred by  the  pure  feed  fund.  This  fund  is  made  up  of  fees  for 
the  inspection  of  feed  for  livestock,  and  the  proceeds  accrue 
to  the  Agricultural  and  Mechanical  College.  The  very  great 
increase  in  the  size  of  the  amount  under  ''all  other  funds"  was 
due  to  the  pension  expenditures.  These  alone  amounted  to 
$1,442,413.85. 

The  expenditures  of  the  state  on  account  of  the  penitentiary 
include  only  those  out  of-  the  general  treasury.  On  account  of 
the  absence  of  reports  or  of  the  defectiveness  of  those  published, 
it  was  not  found  possible  to  include  in  these  tables  any  other 
penitentiary  expenditures. 


A  Financial  History  of  Texas  403 

TABLE  9. 

Expenditures  for  Higher  Education. 

1883  $  96,204  1900  368,936 

1884  189,496  1901  346,050 

1885  164,650  1902  486,653 

1886  84,876  1903  474,303 

1887  91,659  1904  735,420 

1888 96,691  1905  621,274 

1889  228,443  1906  602  930 

1890  134,216  1907  583,817 

1891 140,173  1908  749,090 

1892  207,805  1909  698,110 

1893  174,300  1910  837,669 

1894  259,160  1911  922,211 

1895  196,152  1912  1,203,124 

1896  203,222  1913  1,596,012 

1897  376,681  1914  1,645,209 

1898  245,745  1915  1,547,309 

1899  229,065 


404  Bulletin  of  the  Univemity  of  Texas 


Explanatory  Notes,  Table  9. 

This  table  is  compiled  from  the  reports  of  the  comptroller, 
and  the  amounts  given  are  the  total  of  the  disbursements  of  the 
university  funds  and  the  Agricultural  and  Mechanical  College 
fund,  and  of  the  warrants  drawn  on  the  general  revenue  fund 
for  the  University,  the  Agricultural  and  INIechanical  College,  the 
state  experimental  stations,  the  College  of  Industrial  Arts,  and 
the  normals.  The  amounts  are  gross  amounts,  as  it  was  not 
possible  to  ascertain  all  refunds  and  deduct  them  from  disburse- 
ments. If  the  amounts  given  in  this  table  are  deducted  from 
the  amounts  in  the  column  headed  Education  in  Table  8,  the 
expenditures  of  the  state  for  common  school  education  can  be 
obtained. 

The  statistics  for  1909  are  incomplete  because  of  the  condensed 
character  of  the  comptroller's  report  for  that  year.  The  expen- 
ditures of  the  Agricultural  and  Mechanical  College  fund  are 
omitted,  but  those  of  the  available  university  fund  were  obtained 
from  the  report  of  the  board  of  regents. 


A  Financial  History  of  Texas 


405 


TABI.Z:    10. 

Classified  Net  Receipts. 


Year 


Taxes 


1847_- 
1848- 
1849- 
1850- 
1851-. 
1852_. 
185S- 
1854- 
1855- 
1856- 
1857- 
1858- 


1861- 
1862- 
1868. 
1864- 
1865- 
1866- 
1867. 


1869. 
1870- 
1871- 

1872. 
1873- 
1874. 
IMo- 
1876- 
1877. 
1878- 
1879. 
1880. 
1881- 


1884 


1887.- 


1889- 
1890- 
1891- 


1894. 
1895- 


1897—. 


1900. 
1901. 
1902- 
1903. 
1904. 
1905- 
1906. 
1907- 
1908- 
1909. 
1910- 
1911- 
1912- 
1913- 
1914- 
1915- 


58,653 
91,905 
93,670 

101,625 
93,337 

119,724 
34,061 
15,419 
18,348 
24,162 
24,940 
23,637 

211,148 

317,204 


Sale  of 
Bonds 


79 
1,812 
708 
341 
328 
408 
578 
436 
523 
954 
1,175 
1,347 
1,230 
1,339 
1,596 
1,746 
2,048 
2,293 
2,506 
2,632 
2,439 
2,141 
2,419 
3,013 
3,274, 
3,111 
2,277 
3,120, 
3,430 
3,334 
3,286, 
3,192 
3,229 
4,517, 
4,032 
4,353 
4,497 
4,579 
4,501. 
4,828, 
4,967, 
5,059. 
5,225. 
6,043, 
6,784. 
7,494. 
7,019, 
7,607. 
7.274. 
9,475. 
9,254, 
13,944, 
12,546, 


,9oo: 

,740 
,503i 
,971  i 
,;367 
,678 
,304 
,214 
,113 
,196 
,540 
,759 
,350 
,1:^7 
,389 
,470 
,279 
,850 
,944 
,117 
,547 
,741 
,500 
,131 


165,545 
18,450 


Sale  or 
Land 


2,498 
1,< 


10,931 
4,516 

9,898 


264,834 
447,813 
151,502 
542,587 
V19,236 
590,840 
101,125 

'206^031 

776,677 

9,25fi 

1,000 

1,000 


200,000 


013 
751 
8<Hi 

ms 

619i 

415 


30,166 
18,677 
27,541 
76,357 
26,038 

3,956 

52,454 

148, 6&t 

9,323 


,215|, 

,160i 

543! 

,0981 

,871 !, 

,997 

156 

051 

903 

907 

763 

354 

013 

067 

900 

782 

061 

866 

591 

468 

418 

148 


1 ,240 

2,226 

3,673 

3,228 

327 

1,415 

1,572 

3'.), 843 

115,^16 

32,957 

45,418 

99,896 

158,964 

308,408 

823,803 

1,874,685 

411,226 

192,324 

310,144 

376,915 

214,049 

328,800 

570,310 

647,591 

314,475 

305,034 

130,877 

186,972 

221,644 

199,458 

371,133 

498,549 

699,230 

807,972 

1,168,268 

704,213 

605,300 

461,169 

938,678 

1,004,292 

60Cr,534 

825,466 

909,943 

575.046 

586,115 

690,379 

553,607 

254,642 


Lease    of 
Land 


Interest 


$     81,000 


25,228 
227,560 
241,272 
266,272 
319,673 
260,465 
19J,6.37 
189,727 
179,527 
225,547 
279,240 
361,205 
469,102 
542,148 
480,522 
543,806 
44^5,854 
.390,458 
■406,871 
354,457 
300,083 
228,964 
193,839 
103,869 

99,733 
116,737 
158,409 
144,702 
180,501 


327 
192 
272 
181 
186 
178 
162 
144 
128 
59 
19 


Fees 


500 
566 
100 1 
4001 
4211 
516  i 
460: 
788 
726 
2791 
5001 


705! 


54,641 
6.230 


139,530 

144,910 

169,046 

147,979 

1.56,756 

1.54,437 

187,918 

l'")6,396 

ia3,966 

198,317 

142,187 

258,843 

365,254 

616,728 

674,082 

563,871 

707,943 

695,096 

833,231 

720,836 

991,071 

921,612 

960,068 

573,844 

755,001 

579,339 

704,437 

671,277 

578,711 

672,130 

725,340 

840,726 

869,970 

943,777 

1,026,604 

1,096,632 

1,202,362 

1,438,443 

1,. 585, 044 

1,917,667 

1,970,046 

2,019,460 

2,246,690 

2,084,113 

2,085,659 


377 
991 
2,584 
5,124 
4,712 
4,686 


Miscel- 
laneous 


6,279 
1,505 


4,' 

5,2t)0 

6,1.56 

6,921 

9,478 

19,354 

28,271 

41,919 

.55,919 

74,253 

67,350 

56,573 

54,337 

74,060 

in6,4:-7 

102,969 

96,595 

105,689 

103,168 

78,918 

105,702 

78,674 

39,386 

45,553 

40,840 

36,383 

36,584 

.36,329 

33,854 

29,989 

28,882 

41,. 370 

39,746 

49,461 

65,694 

80,653 

91,796 

89, 461 1 

102, 325 j 

161,338 

289,0801 

241, 063 1 

2.59,660! 

473,474! 

468,9451 

403,981; 

373,134! 

.566,873! 

570,6691 


126,147 

11,877 

10,198 

7,747 

4,358 

,013,833 

5,035 

25,998 

39,945 

313,887 

29,456 

10,718 

30,714 

24,072 

349,112 

328,486 

874,492 

,686,964 

,126,759 

144,045 

13,885 

3ai 

44,858 

20,868 

10,745 

29,099 

5,081 

17,795 

15,286 

15,760 

8,731 

8,475 

3,280 

2.601 

3.S^5 

4,537 

3,lt)8 

6,394 

235,981 

424,034 

144,223 

927,063 

60,683 

107,767 

244,305 

216,090 

.353,983 

2.38,677 

293, 5a5 

230,176 

322,274 

451,500 

160,222 

196,459 

351,805 

418,917 

268,710 

290,601 

321 ,628 

729,525 

58,374 

138,760 

,855,478, 

2.36,883 

31,241 

.32,095 

555,103 

148,028 

125,187 


Total 


;        184,80^3 

106,657 

106,491 

111,956 

152,7.51 

5,470,287 

-46,249 

313,518 

239, 6'.  )4 

524,471 

263,079 

215,493 

414,192 

546,361 

434,4.30 

555,727 

1,025,137 

3,655,1.37 

1,846^559 

362,667 

402,279 

421,375 

631,4.56 

467,. 576 

951,012 

1,-596,045 

1,581,077 

2,o:w,]97 

2,217,171 
2,290,227 
1,994,554 
2,053,142 
2,546,363 
3,504,56'^ 
.^.076.4'>'7 
3,823,700 
4,780,475 
3,362,539 
3,824,698 
4,390,8.54 
4,634,032 
5,254,192 
3,781,275 
4,8.31,-304 
5,674,101 
5,083,442 
5,1-36,536 
4,367,472 
4,678,102 
5,804,240 
5,566,-391 
6,2.50,359 
6,244,329 
6,7-38.-586 
6,932,387 
7,881,276 
7,348,453 
7,388,-362 
7,543,954 
9,323,646 
9,638,259 
10,142,667 
11,739,272 
11 ,248,899 
10,419,879 
12,6.33,981 
13,279,310 
17,441,744 
15,492,-308 


406  Bulletin  of  the  University  of  Texas 


Explanatory  Notes,  Table  10. 

1851.  $36,000  received  by  the  general  revenue  account  from 
the  sale  of  state  bonds  to  the  school  fund  is  included  as  a  net 
receipt. 

1852.  Under  miscellaneous  is  included  the  $5,000,000  in 
United  States  bonds  received  from  the  United  States  under  the 
terms  of  the  Boundary  Act. 

1856.  Under  miscellaneous  is  included  $298,421  refunded  by 
the  United  States  for  that  amount  of  the  revenue  debt  of  the 
republic  paid  by  Texas. 

1861.  The  interest  coupons  on  the  United  States  bonds  held 
by  the  school  fund  are  counted  as  cash  receipts.  State  warrants 
received  in  the  collection  of  revenue  are  not  counted  as  the  equiv- 
alent of  cash  receipts. 

It  is  impossible  to  separate  taxes  from  fees  and  miscellaneous, 
receipts  and  all  are  included  under  miscellaneous. 

1862-1863.     The  bulk  of  taxes  is  under  miscellaneous. 

According  to  a  statement  in  the  report  of  the  comptroller  for 
1868-1869  the  total  received  from  sales  of  land  during  the  Civil 
War  was  $373,923.84.  This  is  $133,466.79  greater  than  the  sum 
of  the  items  in  Table  9  for  1861-1865,  and  the  difference  is  due 
to  defects  in  classification  of  receipts  as  given  in  the  reports  of 
the  state  treasury.  According  to  the  report  of  the  comptroller 
the  following  funds  received  the  proceeds  of  land  sales;  the 
university  fund,  $137,344.44:  the  school  fund,  $11,910.50;  the 
general  revenue  fund,  $224,668.90.  Only  $225.52  of  the  receipts 
w^as  in  specie,  while  $43,502  was  in  state  warrants  and  $330,- 
196.32  was  in  Confederate  currency. 

1877-1878.  In  the  report  of  the  comptroller  only  the  gen- 
eral revenue,  the  available  school  and  the  permanent  school  funds 
are  given  separately  by  years.  The  net  receipts  for  the  two  years 
to  the  funds  which  are  not  separated  by  years  are  as  follows: 

From  sale  of  state  bonds $136,269.15 

From  sale  of  land 125,380,10 

From  interest     '. .  295.16 

From  taxes    4.30 

From  miscellaneous     56.42 

Total    $262,005.13 


A  Financial  History  of  Texas  ^i07 

This  failure  of  the  report  to  separate  the  receipts  by  years 
vitiates  the  statistics  in  Table  10  for  1877-1878.  Another  de- 
fect in  the  report  is  the  failure  to  separate  the  interest  on  state 
bonds  held  by  the  permanent  school  fund  from  the  interest  .on 
the  other  bonds  held  by  that  fund. 

1885.  $215,837.55  of  the  receipts  under  miscellaneous  was 
from  the  Land  Board,  and  the  report  does  not  state  whether  they 
were  from  sales  or  from  lease  of  land. 

1886.  $415,000  of  the  receipts  under  miscellaneous  was  from 
the  Land  Board. 

1887.  $125,000  of  the  receipts  under  miscellaneous  was  from 
the  Land  Board. 

1888.  In  miscellaneous  is  included  a  refund  by  the  United 
States  of  $922,541.52  expended  by  Texas  on  frontier  defence. 

Interest  on  state  bonds  and  interest  on  land  sales  of  the 
asylum  funds  were  not  separated  by  the  comptroller,  and  the 
amount  given  is  not  included  in  Table  10. 

1889.  There  is  a  failure  again  of  the  comptroller  to  classify 
the  receipts  of  the  asylum  funds,  and,  consequently,  their  re- 
ceipts are  not  included  in  Table  10.  No  classification  of  these, 
receipts  was  made  in  the  report  of  1890. 

Beginning  in  1889  and  extending  through  1915  the  receipts' 
by  the  state  department  are  not  classified  in  the  comptroller's 
report  of  the  receipts  from  that  department,  and  as  their  class- 
ification in  the  report  of  the  secretary  of  state  is  not  for  the 
same  fiscal  period  as  are  the  receipts  given  in  the  report  of  the 
comptix)ller,  the  receipts  by  the  secretary  of  state  are  classified 
under  miscellaneous,  except  since  1906. 

1906.  Miscellaneous  receipts  are  large  because  of  a  refund  by 
the  United  States  Government  of  $375,418.94  for  expenses  in- 
curred in  frontier  defence  before  the  Civil  War. 

1907.  Beginning  with  1907  the  classification  found  in  the 
report  of  the  secretary  of  state  is  followed,  although  the  total  of 
the  receipts  differs  from  the  amount  given  by  the  comptroller. 
The  amounts  given  by  the  secretary  of  state  were  received  in  his 
office  during  the  fiscal  year,  but  they  were  not  all  paid  into 
the  general  treasury  during  the  fiscal  year.  The  comptroller 
gives  only  the  amounts  paid  into  the  general  treasury  by  the 


408  Bulletin  of  the  University  of  Texas 

secretary  of  state.  An  inteliigent  system  of  state  accounting 
would  enable  one  to  find  somewhere  in  the  state  reports  a  classi- 
fied statement  of  this  latter  amount,  but  it  cannot  be  found  in 
a«iy  of  the  Texas  reports.  The  receipts  from  corporation  fran- 
chise taxes  and  from  charter  and  permit  fees  are  too  large  to 
be  classified  under  miscellaneous,  and  this  is  the  justification  in 
following  the  report  of  the  secretary  of  state  since  1906.  It  was 
only  in  1906  that  his  report  became  satisfactory  enough  to  fol- 
low even  to  this  extent. 

1909.  Miscellaneous  receipts  are  large  because  of  the  heavy 
penalties  collected  by  the  state  from  companies  adjudged  to  have 
violated  the  anti-trust  act  of  the  state.  Receipts  from  the  office 
of  the  attorney  general  amounted  in  1909  to  $1,770,212,  all  of 
which  has  to  be  classified  under  miscellaneous. 

The  report  of  the  comptroller  for  1909  omits  the  statements 
of  the  special  treasury  funds,  except  the  available. school  fund. 
A  fit  of  executive  economy  caused  a  foolish  condensation  of  the 
report  of  the  comptroller,  the  result  of  which  was  a  withholding 
of  the  statistics  which  an  enlightened  state  should  provide  for 
its  citizens  and  for  those  outside  the  state  who  are  interested 
in  state  finances.  The  report  of  the  board  of  regents  of  the 
University  fortunately,  though  by  accident,  contains  the  statis- 
tics of  the  available  university  fund.  The  reports  of  the  comp- 
troller since  1908  are  very  defective  in  their  statements  of 
the  university  funds,  but  the  blame  for  this  should  be  divided 
with  the  general  land  office.  The  latter  in  making  its  deposits 
does  not  distinguish  between  land  rentals  and  interest  on  land 
sales.  The  reports  of  the  regents  in  1909  and  1910  contain  a 
correct  statement  of  the  available  university  fund,  but  this  state- 
ment is  omitted  since  1910  and  only  an  income  and  expenditure 
account  is  given.  The  latter  account  is  followed  for  this  table, 
though  it  is  not  just  what  is  desired. 

1912.  There  is  a  typographical  error  of  $600  among  the  items 
•of  receipts  of  the  general  revenue  fund,  and  $600  is  added  to 
miscellaneous  to  make  up  for  this  omission. 

1914.  The  interest  on  land  notes  held  by  the  available  blind, 
.  deaf  and  dumb,  lunatic  and  orphans'  asylum  funds  can  not  be 
ascertained  from  the  comptroller's  report,  but  the  amounts  were 
obtained  from  the  comptroller's  office. 


A  Financial  History  of  Texas 


409 


TABZ.X:  11. 
Classified  Taxes. 


Year 

Ad- 
valorem 
Taxes 

Poll 
Taxes 

Income 
Tax 

Salary 
Tax 

General 
Occupa- 
tion 
Taxes 

Special 
Occupa- 
tion 
Taxes 

Fran- 
chise 
Taxes 

Inheri- 
tance 
Tax 

1846 

$         64,727 

75,125 

95,294 

92,199 

76,071 

85,609 

121,476 

149,393 

191 ,143 

225,270 

242,969 

$      15,310 
17,372 
21,429 
21,288 
il,520 
12,040 
14,253 
16,687 
18  338 

$      13,830 
27,739 
21,013 
17,872 
16,528 
23,369 

1847 

1848 

1849 

1850 

1851 

1852 



15,855 
22,081 
37,033 
27,570 
28,993 
26,940 

1853 

1854 

1855 

20,982 

99.4-13 

1856 

1857- 

276,663!        24,463 
244,158!        25,597 
282,939         26.787 



1858 

27,115 
33,633 
52,280 
43,097 

"""■ ! 

1859 

■ 

1860 

367,894 

465,494 

700,609 

1.675,953 

1,790,959 

150,992 

153,436 

255,861 

214,883 

224,508 

257,800 

1,212,741 

1,100,655 

1,117,934 

1,222,509 

1,254,354 

1,288,246 

1,504,828 

1    Klfi  19^ 

27,746 

28,521 

66,776 

53,798 

75,20-? 

56,529 

58,048 

99,484 

95,743 

95,895 

103,858 

171,378 

158,291 

168,254 

179,714 

198,322 

211,084 

464,808 

500,211 

531,778 

542,604 

575,446 

439,564 

464,120 

473,495 

1861 

lg6,9 



1863 

$      56,275 
121,739 
136,302 

13,932 

57,275 

172,279 

1864 

1835 

1866 

1867 

38,901 
14,600 
22,791 
27,325 

$        1,187]       133, TOl 
1,087       118,936 
1,015       146.023 

18f!8 



1869 

1870 

1,346 

148,149 
262,406 
207,330 

1871 

187' 

1873 

1874 

361,228 
295,012 

1875. 

1876      _. 

1877 

385,943 
377,934 

1878 

1879                 1.519  f;16 

425,229 

1880  . 

1,594,853 
1,428,000 
1,259,844 
1,582,612 
1,809,182 

608,919 
472,858 
608,054 
617,606 
806,468 

$      27,660 
30,542 
48,558 
40,430 
61,283 

1881 

188^ 

1883- 

1884     _ 

1885 

1886 

2,265,836 
2,186,283 
2,225,511 
1,486,596 
2,228,948 
2,563,146 
2,343,557 
2,192,780 
2,226,177 
2,180,248 
3,556,475 
2,985,583 
3,159,176 
2,169,998 
3,294,206 
3,053,769 
3,404,289 
3,458,084 
3,601,176 
3,705,375 
4,344,869 
4,595,407 
5,193,861 
4,945,003 
4,910,406 
4,696,362 
6,776.399 
7,142,402 
11,455,906 
9,873,880 

342,418 
354,668 
372,878 
371,429 
395,013 
409,384 
427,305 
446,619 
455,572 
471,645 
484,091 
472,126 
508,817 
516,140 
530,873 
544,805 
561,358 
633,501 
683,797 
642,353 
723,777 
688,905 
772,491 
759,061 
804,066 
830,113 
844,349 
"    808,243 
920,127 
812,339 

676,630 
688,535 
565,363 
662,323 
7.59,111 
857,531 
912,743 
892,962 
822,000 
792,100 
835,659 
779,471 
941,701 
916,800 
918,981 
1,009,506 
1,057,464 
1,014,140 
941,302 
922,429 
970,365 
1,070,882 
1,199,582 
948,147 
852,490 
982,^ 
905,800 
1,017,182 
980,104 
953,431 

39,809 

40,338 

47,940 

53,676 

88,839 

97,406 

92,595 

93,146 

128,485 

133,791 

126,908 

136,810 

174,397 

184,077 

204,524 

231,854 

299,148 

303,663 

315,424 

381,480 

578,583 

576,469 

720,698 

714,268 

770,698 

796,401 

807,765 

961,477 

1,026,610 

1,071,473 

1887 

1888 

1889 

18fl0 

1891 

1892 

1893    .  - 

18^4 

$    23,350 

44,609 

111,042 

^     207,663 
140,695 
153,534 

i    301,795 

I    430,532 
239,173 
397,062 
425,217 
449,667 
466,065 
494,417 
521,019 
537,449 
513,986 

18r>5 

18')6 

1897 

1898 

1899 

1900 

1901 

1902.      - 

1903-     _- 

1904 

1905 

1906 

1907 

1908 

"" 

1909 

$       7,595 
67,396 
16,068 

47  579 

1910 

1911  . 



1919 

1913 

1914 

1915_ 





24.333 
43,105 
22, 896 

410  Bulletin  of  tJw  University  of  Texas 

Explanatory  Notes,  Table  11. 

The  purpose  in  presenting  this  table  is  to  give  an  approximate 
idea  of  the  financial  importance  of  the  different  taxes  employed 
by  the  state  government.  In  the  causes  of  the  ad  valorem,  the 
poll,  the  income  and  the  salary  taxes  the  statistics  are  of  assessed 
taxes  only;  but  figures  for  assessed  taxes  are  imperfect  because 
they  are  subject  to  deductions  for  errors  in  assessment,  for  costs 
of  assessment,  collection,  and  remittance,  and  for  losses  through 
the  insolvency  or  the  delinquency  of  the  persons  assessed.  Up 
to  1882  the  amounts  of  these  deductions  are  not  given  nor  are  the 
deductions  anywhere  made  in  the  financial  reports  of  the  state. 
Since  1882  the  amounts  are  given,  except  those  for  costs  of  as- 
sessment and  collection  of  each  of  the  taxes.  Since  1907  the 
cost  of  the  collection  of  the  poll  tax  has  been  separately  itemized, 
but  there  is  no  separation  of  the  costs  of  the  assessment  and 
collection  of  the  ad  valorem,  general  occupation,  and  inheritance 
taxes,  and  this  is  one  of  the  prime  defects  of  the  report  of 
the  comptroller,  because  it  makes  it  impossible  to  tell  the  net 
amount  Avhich  the  general  revenue  fund  receives  annually  from 
each  of  these  taxes. 

The  amounts  of  assessed  taxes  after  each  year  in  the  table 
represents  down  to  1885  the  assessments  made  that  year.  Be- 
ginning with  1886,  however,  the  amounts  are  the  assessments 
of  the  preceding  year  with  deductions  for  insolvency,  errors, 
and  delinquency,  and  with  the  addition  of  the  amounts  received 
during  the  year  from  redemptions  and  from  collections  by  the 
comptroller.  The  receipts  from  the  special  occupation  taxes, 
the  franchise  taxes,  and  the  inheritance  tax  are  net.  The  table 
is  thus  a  hybrid,  but  any  other  sort  of  a  table  is  impossible 
because  of  the  character  of  the  financial  reports  of  the  state. 

The  collection  of  the  franchise  tax  is  by  the  office  of  the 
seeretaiy  of  state.  The  practice  of  the  state  department  of 
reporting  its  collections  to  the  comptroller  as  well  as  the  way 
in  which  the  collections  are  listed  in  the  report  of  the  secretary 
of  state  make  it  impossible  to  co-ordinate  the  receipts  from  the 
franchise  tax  with  the  pther  receipts  of  the  general  revenue  fund. 


A  Financial  History  of  Texas  411 

Down  to  1907  there  is  no  uniformity  whatever  in  the  periods  for 
which  receipts  are  reported  by  the  state  department.  The 
periods  and  amounts  were  as  follows : 

January  18,  1895-December  1,  1896 $  44,609 

December  1,  1896- January  1,  1899 111,042 

January  1,  1899-December  31,  1900 207,663 

January  1,  1901-August  31,  1901 140,695 

September  1,  1901-Au^st  31,  1902 153,534 

January  1,  1903- August  31,  1904 301,795 

September  1,  1904- August  31,  1906 430,532 

Only  in  1908  and  1910  is  it  possible  to  ascertain  from  the 
report  of  the  secretary  of  state  and  the  report  of  the  comp- 
troller the  exact  amount  received  by  the  general  revenue  fund 
from  the  several  sources  of  revenue  administered  in  the  office 
of  the  secretary  of  state.  The  amounts  given  for  the  years  after 
1908  are  the  receipts  during  the  fiscal  year  to  the  state  depart- 
ment, but  as  one  month's  receipts  are  not  reported  to  the  comp- 
troller until  the  following  month,  and  then  with  unclassified  de- 
ductions for  refunds  and  exchange,  the  receipts  to  the  general 
revenue  fund  and  those  classified  in  the  report  of  the  state  de- 
partment cannot  be  harmonized.  The  state  department  in  its 
report  to  the  comptroller's  department  makes  no  attempt  at  class- 
ification of  the  receipts,  but  includes  them  all  under  the  mean- 
ingless item  ''office  collections,"  and  they  appear  under  this  title 
in  the  comptroller's  report. 

In  1909,  1910,  and  1911  the  ad  valorem  taxes  on  property  in 
unorganized  counties  are  the  assessed,  not  the  collected,  amounts. 
The  latter  are  not  given  by  the  comptroller.  Beginning  with  the 
report  of  the  comptroller  for  1911  there  are  no  separate  tax 
statistics  of  any  kind  for  the  unorganized  counties.  Fortunately 
the  receipts  of  this  character  are  small,  less  than  $3,000,  so 
that  the  receipts  as  given  in  Table  11  from  ad  valorem  taxes  are 
not  much  affected  by  the  omission. 


412 


Bulletin  of  the  University  of  Texas 


TABI.I:    12. 

Tax  Rates. 

Year 

General 

Revenue 

Ad  Valorem 

Cents 

School 

Ad  Valorem 

Cents 

General 
.      Revenue 
Poll 

School 
Poll 

Confederate 

Ad  Valorem 

Cents 

1846 

20 

20 

20 

20 

15 

15 

15 
1            15 

15 

15 

15 

15 

12.5 

12.5 

12.5 
.     16 

25 

50 

50 

12.5 

20 

20 

15 

15 

15 

50 

50 

50 

50 

50 

50 

50 

50 

50 

50 

40 

30 

30 

17.5 

25 

25 

25 

10 

20 

20 

16.66 

15 

15 

15 

25 

20 

20 

20 

20               j 

16.66           1 

16.66          1 

16.66 

16.66 

16.66 

20 

20 

12.5 

6.25 

5 

4 
12.5 
10 
23 

12.5 
30 

$   1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

l.OO 

1.00 

1.00 

1.00 

.50 

.50 

.50 

.50 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

.50 

T817 

1848 

1849 

1850 

1851 

1852 

1853 

1854 

1855 

1856 

1857 

1858 

. 

1850 

I860        

1861 

1862 

181"3 

1^4     

1865 

1868 

1867  - 

1868 

186» 

• 

1870 

1871     

1S72 

1873 

1874. 

1875 

1S76 

1877 

$  i.66 

1.00 
1.00 
1.00 
l.OO 
1.00 
1.00 
1.00 
1.00 
1.00 
1.00 
1.00 
1.00 
1.00 
1.00 
1.00 
1.00 

1.00       ; 
1.00       ! 

1.00 

1.00       ! 

1.00 
1.00 
1.00 

1.00       ! 

1.00         i 

1.00         1 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 

1.00 



1878.. 



1879 

1880 

1881 

im 

1883 

1884 

12.5 

12.5 

12.5 

12.5 

12.5 

12.5 

12.5 

12.5 

12.5 

12.3 

12.5 

20 

18 

18 

18 

18 

18 

18 

18 

18 

18 

18 

18 

20 

16.66 

16.66 

16.66 

16.66 

16.66 

17 

20 

20 

1885 

1887 

1888 

1894 

1895 

1896... 

T897 

taoQ 

1  aoo 

1900....^!"  "I 

IQfVQ                             i 

1904 

1907                    1 
1908 : 

1910 

1911 

1913 

_.-. 

1914 

5 

1915 

5 

5 

A  Financial  History  of  Texas 


413 


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A  Financial  History  of  Texas  415 


Explanatory  Notes,  Table  13. 

The  taxable  values  presented  in  this  table  are  compiled  from 
the  oriofinal  published  reports  of  the  comptroller  and  from  pub- 
lished abstracts  of  the  reports  of  that  officer.  Because  of  typo- 
graphical errors  in  the  reports  the  totals  of  the  years  are  in 
some  cases  different  from  the  sum  of  the  classified  items,  but 
these  differences  are  not  important. 

There  was  included  under  real  property  from  1846  to  1865 
only  rural  real  estate;  town  lots  and  land  certificates  were  put 
among  miscellaneous  property.  After,  and  including-  1865,  the 
class  of  real  property  includes  all  land  and  improvements  and 
land  certificates.  There  was  no  separate  statement  of  the  as- 
sessed value  of  railroads  before  1874,  and  it  seems  probable  that 
railroads  were  assessed  })efore  that  date  under  the  head  of  real 
property. 

Only  the  total  values  for  1862  and  1863  can  be  given,  and 
these  are  taken  from  the  synopsis  of  the  report  of  the  comp- 
troller as  given  in  the  Texas  Almanac  for  1864.  The  almanacs 
of  1863  and  1864  contain  tables  of  the  assessed  value  of  the 
different  kinds  of  property,  but  their  sums  fall  so  far  short  of 
the  totals  given  in  the  table  that  classification  is  not  attempted 
for  these  years.  The  assessed  value  of  land  in  1862,  as  reported 
in  the  Almanac,  was  $80,810,890,  and  in  1863,  $108,125,716, 
but  these  are  below  the  real  amounts. 

Beginning  with  1909  all  of  the  intangible  assets  are  included 
under  railroad  values,  except  in  1913,  w^hen  the  report"  of  the 
state  tax  commissioner  is  followed  and  all  but  $181,945  of  the 
intangible  assets  are  assessed  to  the  railroads  and  except  in 
1914  and  1915  when  the  amounts  given  by  the  comptroller  in 
a  special  table  are  followed. 


416 


Bulletin  of  the  U)iiversity  of  Texas 


TABLE  14. 

General  Revenue  Fund. 


Year 


T847- 
1848. 
1849- 
1850- 
1851. 
1852. 

1853. 

1854- 

1855- 

1856. 

1857. 

1858. 


Receipts 


Cash 
Bonds 


1861- 
1862. 

1865. 

1864- 

1865- 


1867- 
1868- 
1869- 
T870. 
1871. 
1872- 
1873. 
1874- 
1875- 
1876. 
1877. 
1878. 
1879. 
1880. 
1881- 


Cash 
Bonds 

Cash 
Bonds 
Cash 
Bonds 


T884. 
1885. 
1886. 
1887. 


1892. 
1893- 
1894. 


1897. 
1888- 
1899- 


Cash 
Note 


^  178, 
97, 
96, 
101, 
141, 
1,273 
5,000 
230 


250, 

"ns' 


Expenditures 


127 ,677 
116,161 
82,232 
148,007 
115,084 
674,542 
608,000 
463,155 


Trans- 
fers 


Cash 
Bonds 


474,245 

2,000,000 

244,879 


275  Cash 
Bonds 


115 


480,797 
115,000 
280,247 


1,335 


Total 
Disburse- 
ments 


127,677 
116,161 
82,232 
148,065 
115,372 


,282,580 
464,490 


,474,245 
244,879 


322 

"zso 


lob  Cash 
-..iBonds 
660  Cash 
Bonds 


1,567,204 


373, 
414, 
529, 
409, 
538, 
941, 
9:32, 
1,304, 
1,531, 
1,006, 
1,298, 
1,291, 
1,752, 
1,904, 
2,080, 
2,168, 
1,759, 
1,544, 
1,792, 
2,097, 
2,287, 
3,063 
1,444 
2,125, 
2,561 
2,069 
2,192 
2,008, 
2,011 
2,966, 
2,235, 
2,916, 


321,529 
427,000 
175,214 
205,000 
366,907 
359,000 
467,836 
419,154 
579,655 

1,100,308 
56,150 

1.830.617 


674,978 


233,089 
473,613 


285 


,774 


9,841 


748,815 


380,214 


725,907 
467.836 


158,458 
,830,617 


684,753 


233,089 

4a'?,45.-> 


Balance  at  end  of  year 


Cash 

Bonds 

Cash 

Bonds 

Cash 

Bonds 

Cash 

Bonds 

Cash 

Bonds 

Cash 

Bonds 

Cash 

Bonds 

Cash 

Bonds 

Cash 

Bonds 

Specie 

Confed.  Notes 
Specie 

Confed.  Notes 
Specie 

Confed.  Notes 
Specie 
Confed.  Notes 


350,208 
371,106 

-- 

350,208, 
371,177 

508,498 

1,308 

509,807 

581,830 

561,830 

941 ,213 

941,213 

938,760 

938,760 

1,248,146 

56,845 

1,304,991 

1,422,095 

1,422,095 
1,199,062 

1,091,626 

107,455 

1,250,692 

10,094 

1,260,786 

1,225,689 

1,225,689 

1,486,170 

115,263 

1,601,434 

1,344,360 

113,811 

1,458,172 

1,436,002 

159,089 

1.595,092 

2,534,290 

300,577 

2,834,868 

1,911,648 

29,029 

1,940,677 

1,738,769 

6,041 

1,744,810 

1,843,802 

8,874 

1,852,677 

1,567,111 

52,011 

1,619,123 

1,918,067 

43,556 

1,961,624 

2,056,050 

637,280 

2,693,330 

2,272,347 

3,143 

3,275,491 

1,906,727 

26,311 

1,935,039 

2,167,498 

5,506 

2,173,095 

2,555,927 

70,760 

2,626,688 

2,428,219 

27,415 

2,455,634 

2,149,124 

8,248 

2,157,372 

2,021,606 

2,021,606 
2,844,700 
2,295,910 

2,864,700 

2,295,910 

2,153,766 

994 

2,154,761 

2,375,607 

3,470 

2,379,077 

Cash 
Note 


^      51,238 

32,287 

46,564 

1 

25,890 

624,677 

3,575,000 

390,301 

3,575,000 

166,062 

1,575,000 

39,748 

1,575.000 

154,226 

1,263,000 

16 

1,230,000 

956 

546,000 

106,402 

305,000 

77,934 

50,000 

36,262 

2,454 

105,628 

659 

15,160 

1,496 

1,539,338 

2,703 

2,420,582 

111,357 

1,320 

82,938 

241,607 

51,043 

7.692 

7,761 

1,301 

373 

109,778 

6,764 

44,554 

110,113 

261,106 

707,189 

1,192,438 

526,545 

345,154 

145,298 

84,841 

563,463 

868,970 

1,259,126 

428,410 

618,622 

1.007,198 

450,332 

187,425 

38,443 

28,072 

109,753 

49,787 

811,279 

1,092,807 


A  Financial  History  of  Texas 


417 


TABIii:  14 — Continued. 
G-eneral  Revenue   Fund. 


Year 

ReceipLs 

Expenditures 

Trans- 
fers 

Total 
Disburse- 
ments 

Balance  at  end  of  year 

1900 

Cash     $2,800,578 

Note                 450 

2,865,238 

$2,733,781 

$            17 

$2,733,798 

Cash 
Note 
Cash 
Note 
Cash 
Note 
Cash 
Note 
Cash 

$1,159,587 
3,40* 

1901 

2,851,455 

2,851,455 

1.173,370 
0,773: 

1902 

3,148,468 

3,187,382 

3,187,382 

1,134,455 
">  728- 

1903 

2,808,582 

3,408.523 

5 

3,406,528 

529.510 

1,515 

.      •   62.86# 

1,000 

77,111 

800^ 

1904 

3,099,756 

3,566,401 

3,566,401 

Note 
Cash 
Note 

1905 

3,135,486 

3,121,239 

3,121,239 

1906 

])K>7 

4,203,837 
4,161,587 
4.003,223 
5,013,272 
4,046,040 
3,624,208 
5,148,962 
5,269,531 
9,582,206 
6,028,990 

4,184,982 
3,564,898 
3,806,851 
4,159,011 
4,364,607 
4,528,450 
5,131,653 
5,366,348 
6,9<)8,816 
7,195,506 

42 

4,185,025 
3,564,898 
3,806,851 
4,150,056 
4,364,607 
4,635,725 
5,131,653 

95,92S 
692  612" 

1908 

888,985 

1909 

1910 

45 

1.743,20& 
1,424.641 

1911 

191  *> 

107,274 

413,124 
430,433- 

1913     _- 

5,366,348! 
8,194,2141 
7,195,506 

333,615 

1,721 ,60» 

555,103 

1914 

1915 

1,195,397 

27— H 


418  Bulletin  of  the  University  of  Texas 


Explanatory  Notes^  Table  14. 

Transfers  to  the  school  funds  are  excluded  from  both  the 
credit  and  debit  sides  of  the  general  fund  as  given  in  this  table, 
because  such  transfers  represent  neither  a  net  receipt  to,  nor  a 
net  expenditure  of,  the  fund.  An  appropriation  out  of  the  gen- 
eral fund  to  the  school  fund  as,  for  example,  that  of  $2,000,000 
of  United  States  bonds  in  1854,  is  counted  among  the  expendi- 
tures of  the  general  fund.  Receipts  in  the  form  of  the  paper 
liabilities  of  the  republic  or  of  the  state  are  also  excluded. 
The  following  were  the  amounts  of  the  paper  liabilities  of  the 
republic  which  were  received : 

1847    $101,045.60  1853    9,042.16 

1849    34,961.24  1854    1,122.49 

1850    32,220.15  1855     1,047.47 

1851    7,750.74  1856    •.  . .  .  89.01 

1852    34,771.90  1859    20,187.05 

The  following  were  the  amounts  of  state  warrants: 

1851 $  1,604.54     1867  9,348.25 

1861 604.01     1875  25,284.54 

1862  11,493.87     1876  2,077.47 

1863  289,769.66     1877  611.98 

1864  138,254.51     1878  28.60 

1865  66,990.25     1879  95.75 

1866  122,944.82 

1852.  To  the  $572,000  of  United  States  bonds  expended  in 
payment  of  the  debt  of  the  republic  there  is  added  $36,000 
used  in  canceling  state  bonds  held  by  the  school  fund. 

1856.  The  report  of  the  treasurer  gives  $290,000  as  the 
amount  received  by  the  state  from  the  United  States  as  a  re- 
fund for  the  revenue  debt  of  the  republic  paid  by  Texas.  It 
is  ascertained  from  the  biennial  report  of  the  comptroller  that 
the  refund  amounted  to  $298,421.72  and  that  the  $8,421.72  was 
expended  in  securing  the  refund.  This  amount  is  added  to 
receipts  and  expenditures  in  this  table.  A  transaction  involving 
$115,000  of  Ignited  States  bonds  is  not  shown  in  the  condensed 
form  of  the  report  of  the  treasurer  which  is  used,  and  this  amount 
is  added  to  expenditures. 

1858.  Because  of  the  change  from  October  31  to  August  31 
as  the  end  of  the  fiscal  year,  this  fiscal  year  has  only  ten  months. 

1860.     Included  among  receipts  are  $100,000  of  United  States 


A  Financial  History  of  Texas  419 

bonds  and  $9,472.26  in  specie  transferred  from  the  unii^ersity 
fund. 

1861.  The  biennial  report  of  the  comptroller  for  1860-1861 
gives  $8,520  as  the  amount  of  debt  paid  in  1861,  while  the  ab- 
stract of  the  treasurer's  report  in  the  Texas  Almanac  for  1861 
states  erroneously  that  $8,470  was  the  amount  paid. 

1862.  The  item  bonds  among  receipts  refers  to  United  States 
bonds  and  interest  coupons  which  were  taken  from  the  school 
fund  for  use  for  military  purposes. 

1865.  The  period  covered  is  that  from  August  31,  1864,  to 
June  8,  1865.  The  balance  on  hand  on  June  8,  1865,  is  stated 
by  the  comptroller  to  be  $353,614.82,  but  this  includes  $3,375.33 
of  state  warrants  and  excludes  $2,073,046.76  of  Confederate  notes 
of  old  issues  which  had  been  sent  to  the  treasury  of  the  Con- 
federate government  to  be  exchanged  for  notes  of  new  issues. 

1866.  The  period  covered  is  that  from  October  13,  1865,  to 
August  13,  1866.  Included  among  receipts  is  $7,683.67,  which 
was  the  amount  recovered  from  the  treasury  vault  and  broken 
safes  after  the  robbery  on  the  night  of  June  11,  1865. 

1867.  The  period  covered  by  the  report  is  from  August  14, 
1866,  to  July  31,  1867. 

1868.  The  report  of  the  comptroller  begins  with  September 
1,  1867.     ■ 

1874.  A  typographical  error  in  the  report  of  the  comptroller 
results  in  the  total  of  the  classified  items  of  receipts  being  $2,000 
less  than  the  total  given  in  the  report. 

1875.  The  report  for  this  year  gives  as  the  balance  on  hand 
at  the  beginning  of  the  year  an  amount  w^hich  is  fifty  cents 
greater  than  the  balance  reported  at  the  close  of  the  preceding 
year. 

1882.  On  account  of  a  typographical  error  the  total  of  the 
receipts  is  larger  by  $1,000  than  the  total  given  by  the  comp- 
troller. 

1911.  There  is  a  typographical  error  of  ninety  cents  on  the 
side  of  disbursements,  and  this  amount  is  added  to  the  amount 
disbursed  in  payment  of  warrants. 

1912.  A  typographical  error  results  in  the  omission  of  $600 
from  itemized  receipts,  but  the  total  of  the  comptroller  is  fol- 
lowed in  this  table,  and  for  classification  purpo.ses,  $600  is  added 
to  miscellaneous. 


420 


Bulletin  of  the  University  of  Texas 


TABI.I:   15 
Available  School  Tund. 


Year 

Receipt 

s 

Ordinary 
Disburse- 
ments 

Other 
Disburse- 
ments 

Total 
Disburse- 
ments 

Balance  at  End  of  Year 

1847 

1848 

1849 

1850 

1851 

$        5,885 
9,636 
9,981 
11,005 
11,542 

%        5,8So 

15  521 

25,503 

Cash 

Bonds 

Cash 

Bonds 

Cash 

Bonds 

Cash 

Bonds 

Cash 

Bonds 

Cash 

Bonds 

Cash 

Bonds 

Cash 

Bonds 

Cash 

Bond? 

Cash 

Bonds 

36,509 

:.::-_- 

$      36,000 

$      36,0OOi 

12,051 

36,000 

1852 

13,922 

17,000 

17,000 

8,974 

53,000 

1853 

20,219 

29,193 

53,000 

1854 

Cash 
Bonds 

63,511 

2,000,000 

124,629 

92,70.1 

2,053,00(1 

1855 

$      27,136 

27,136 

190,lf>7 
2,053,00(1 

1856 

128,350 

95,130 

192,130 

126,418 

2,150,000 

1857 

170,784 

106,125 

46,000 

152,125 

145,077 
2,196,000 

1858 

151,690 

] 05, 332 

65,000 

170,3:32 

126,436 
2,261,000 

1859 

174,400 

118,465 

48,000 

166,465 

134,870 

2,309,000 

1860 

207,756 

119,606 

85,000 

204,6t)6 

137,520 

2,394,000 

186] 

Cash 

Warrants 

Int.  Coupons 

Cash 

Warrants 

Int.  Coupons 

Cash 

Int.  Coupons 

85,489 
8,518 
17,675 
63,336 
2,72] 
19,500 
51,876 
4,150 

123,120 

23,500 

146,620 

Specie 

Bonds 

Warrants 

Cash 

Warrants 

Bonds 

Cash 

Warrants 

Bonds 

Cash 

W^arrants 

Bonds 

Specie 

Confed.  Notes 

Warrants 

Bonds 

Cash 

Warrants 

Cash 

76,389 
2,4t7,500 

8,518 

1862 

50,954 

637,175 

688,129 

81,251 

11,2.39 

1,834,980 

1863 

24,697 

66,668 

91,365 

49.9i2 
11,2:39 

1,780,980 

1864 

Confed.  Notes 
Warrants 

184,118 
214,619 

28,041 

28,041 

205,989 
225,8.18 

1,780,1)80 

T865 

Cash 

68,452 

10,850 

10,850 

6,927 

256  063 

11 ,239 

2,073,684 

1866 

Cash 
Warrants 
Cash 
Warrants 

Cash 
Bonds 

25,904 

8,251 

55,662 

930 

7,616 

2,045 

38,030 

168,868 

412,080 

12,000 

514,133 

25,904 

19,490 
.54,533 

1867 

27,032 

27,082 

1868 

2,086 

3,210 

208 

68,271 

532,230 

2,086 

3,210 

61,060 

68,271 

532,230 

Cash 

Bonds 

Cash 

Bonds 

Cash 

Bonds 

Cash 

Bonds 

Cash 

Bonds 

Cash 

Bonds 

Cash 

Bonds 

60,144 

1869 

.58,979 

1870. 

187T- 

60,851 

85,950 
136,096 

1872 

15,896 

12,000 

1873 

194,910 

194,910 

335,116 

12,000 
148,744 

10,500 
108,260 

10,500 
108,095 

10,500 
274,834 

10,500 

320,428 

1,000 

140,721 

77,693 

59,123 
197,738 
424,961 

1S74 

602,432 

790,304 

790,304 

1875. 

579,722 

620,205 

620,205 

1876 

612,702 

609,960 

2,907 

612,868 

1877 

706,707 

499,185 

40,782 

539,968 

1878- 

745,138 

'   682,480 

26,563 

709,043 

1879. 

188iIIII" 

1?S^ 

1883 

i 
1 

889,793 
707,351 
770,006 
1,111,633 
1.?77.P4« 
].52',428 
2,009,191 

983,689 
733,559 

787,582 

913,750 

1.1fiO,625 

1,485,54;) 

1,!)56,025 

36,810 

84,819 

2,995 

59,267 

1,020,500 

768,379 

790,577 

973,018 

1,150,625 

1,401,41] 

],«79,83(i 

1SS4 

i>S8r> 

5,861 
23,8]0 

454,979 
484,334 

A  Financial  History  of  Texas 


421 


TABl^E  15 — Continued. 
Available  School  Fund. 


Ordinary 

Other 

Total 

Year 

Eeceipts 

Disburse- 

Disburse- 

Disburse- 

Balance at  End  of  Year 

ments 

ments 

ments 

1886 

$2,132,189 

$2,422,005 

$     18,537 

$2,440,543 

$    175,980 

1887 

2,109,694 

2,265,987 

10,956 

2,276,895 

8,779 

T888 

2,630,259 

2,541,488 

13,600 

2,555,088 

83,949 

1889 

2,197,»19 

2,205,330 

22,196 

2,227,526 

54,242 

1890 

2,297,954 

2,303,730 

8,199 

2,311,930 

40,266 

1891 

2,694,053 

2,609,348 

8,336 

2,617,684 

117,536 

]892 

2,792,936 

2,535,052 

7,876 

2,542,928 

367,543 

1803 

2,844,458 

3,052,589 

7,719 

3,060,309 

151,692 

1894 

2,334,163 

2,431,425 

3,0SO 

2,434,456 

51,399 

1895 

2,626,145 

2,544,066 

2,544,066 

133,479 
73,060 

1896 

2,843,433 

2,901,982 

1,870 

2,903,852 

1897 

3,273,007 

3,233,314 

3,233,814 

112,758 

97,789 

1898 

3,054,948 

3,069,912 

3,069,912 

1899 

3,151,409 

3,232,624 

3,232,624 

16,574 

1900 

3,318,276 
3,369  002 

3,081,471 
3  4SS  fi'JS 

3  a«i   47T 

253,379 
133,844 

1901 

„|  3^488^628 

1902 

3,636,891    3,565,244 

2,8011  3,568,045 

202,690 

1903 

3,868,069!  3,809,677 

4,069;  3,813,746 

257,012 

1904 

3,724,442;  3,848,496 

118   3,848,614 

132,840 

1905 

3,983,931 

3,971,922 

3,971,922 

144,849 

1906 

4,109,683 

4,218,383 

88   4,218,421 

36,110 

1907 

4,449,020 

4,388,254 

4,388,254 

96,877 

1908 

5,404,913 

5,389,934 

10    5,389,944 

:                                        111,846 

1909 

5,883,691 

5,658,473 

i  5,658,47J 

!                                      337,065 
106,491 

1910. 

6,276,502 

6,507,075 

6,507,075 

1911____-_ 

6,211,655 
6,838,394 
7,204,406 

6,308,287 
6,783,459 

__!  6,306,287 

9,858 

1912 

6,783,459 

64,798 

1913 

7,053,487 

I  7,053,487 

i                                      215,713 

1914 

7,149,680 
7,999,059 

7,348,323 
7,692,144 

1  7.348.323 

i                                         17.070 

1915 

;  7,692,144                                       323.984 

422  Bulletin  of  the  University  of  Texas 


Explanatory  Notes^  Table  15. 

Until  1852  one-tenth  of  the  annual  revenue  of  the  state  was 
set  aside  for  educational  purposes,  but  thereafter  one-tenth  of 
the  annual  revenue  arising  from  direct  taxation  was  set  aside. 

1851.  The  $36,000  among  disbursements  was  for  that  amount 
of  5  per  cent  state  bonds  authorized  to  be  issued  by  an  act  of 
December  2,  1850.  In  1852  these  state  bonds  were  replaced 
by  5  per  cent  United  States  bonds  and  additional  United  States 
bonds  to  the  amount,  of  $17,000  were  secured  of  the  general 
revenue  fund. 

1854.  By  an  act  of  January  31,  1854,  establishing  a  system  of 
schools,  $2,000,000  of  5  per  cent  United  States  bonds  were  ap- 
propriated by  the  state  to  a  fund  entitled  the  special  school 
fund.  Only  the  interest  of  this  fund  could  be  used,  and  it  was 
to  be  distributed  for  the  support  of  these  schools. 

1856.  An  act  of  August  29,  1856,  authorized  the  state  treas- 
urer to  transfer  to  the  general  revenue  fund  the  specie  to  the 
credit  of  the  general  school  fund  and  to  replace  the  same  with 
5  per  cent  United  States  bonds,  and  on  July  1  of  each  year 
thereafter  the  specie  to  the  credit  of  the  school  fund  derived 
from  one-tenth  taxes  was  to  be  exchanged  for  United  States 
bonds.  The  following  were  the  amounts  of  specie  exchanged  for 
bonds  under  the  provisions  of  this  act: 

1856     $97,000 

1857     33.000 

1858    65,000 

1859    36,000 

1860  71,000 

1861     19,000 

The  act  of  1856  also  consolidated  the  two  school  funds  into 
one  entitled  the  school  fund. 

1857.  The  acts  of  August  13  and  August  26,  1856,  provided 
for  the  investment  of  the  school  fund  in  the  bonds  of  railroad 
companies  incorporated  by  the  state.  It  authorized  the  exchange 
of  the  United  States  bonds  and  the  specie  of  the  fund  for  ten 
year  6  per  cent  railroad  bonds.  In  this  table  only  the  specie 
used  is  counted  among  the  .disbursements,  and  in  1857,  $13,000 


A  Fina7icial  History  of  Texas  423 

of  specie  was  so  expended.  In  1859  $12,000 ;  in  1860,  $14,000 ; 
in  1861,  $45,000.  The  transactions  in  which  United  States  bonds 
were  exchanged  for  railroad  bonds  are  not  introduced  into  this 
table. 

1862.  The  $637,175  among  disbursements  was  a  transfer  to 
the  general  revenue  fund  of  $544,480  of  United  States  bonds, 
$35,175  of  interest  coupons  from  United  States  bonds,  and 
$57,520  of  cash.  Such  a  long  period  of  time  elapsed  before  the 
school  fund  was  repaid  that  the  transfer  is  treated  for  practical 
purposes  as  a  disbursement.  The  condition  of  the  fund  can  be 
best  shown  by  this  treatment  of  the  transaction. 

1863.  The  $66,668  among  disbursements  was  a  transfer  to  the 
general  revenue  fund  of  $54,000  of  United  States  bonds,  $4,150 
of  interest  coupons,  and  $8,518  in  cash.  The  explanation  of 
treating  this  as  a  disbursement  is  the  same  as  above. 

1865-1867.  There  are  no  reports  covering  fully  these  years 
but,  as  in  the  case  of  the  general  revenue,  the  reports  are  for 
very  unequal  periods. 

1870.  In  the  report  of  this  year  there  appears  for  the  first 
time  the  division  of  the  school  fund  into  the  permanent  and  the 
available  funds. 


A  Financial  History  of  Texas  425 


Explanatory  Notes,  Table  16. 

This  tabic  is  compiled  from  data  found  in  the  reports  of  the 
comptroller,  and  such  data  are  found  fully  only  since  1886. 
The  statistics  are  those  of  the  cost,  loss  and  waste  in  the  assess- 
ment and  collection  of  taxes  assesed  and  collected  by  county 
assessors  and  collectors.  The  table  does  not  include  the  taxes 
assessed  or  collected  at  the  office  of  the  comptroller,  except  that 
collections  by  the  comptroller  are  given  beginning"  with  the  re- 
port of  1912.  The  tables  in  the  report  of  the  comptroller  from 
which  the  compilations  are  made  are  those  summarizing  the 
accounts  of  tax  collectors  and  ex-collectors. 


426 


Bulletin  of  the  University  of  Texas 


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A  Financial  History  of  Texas  427 


Explanatory  Notes^  Table  17. 

The  amount  of  the  debt  in  1846  is  that  reported  by  the  comp- 
troller to  the  legislature,  March  28,  1846. 

The  amounts  in  1849  and  1851  are  those  contained  in  the 
reports  of  the  auditor  and  comptroller  in  those  years. 

The  debt  given  for  1861  is  the  amount  of  the  deficiency  re- 
ported by  Governor  Houston,  January  19,  1861.  That  for  1862 
is  the  debt  statement  on  January  1,  1863,  as  contained  in  Gov- 
ernor Lubbock's  message  of  February  5,  1863.  The  amount  for 
1865  is  that  reported  by  Messrs.  Pease  and  Palm  to  Provisional- 
Governor  Hamilton,   October  30,   1865. 

The  amounts  given  for  the  public  debt  from  1867  to  1883  con- 
tain the  amounts  of  the  bonds  of  doubtful  validity,  including 
the  comptroller's  certificate  of  indebtedness  held  by  the  uni- 
versity fund,  but  they  do  not  contain  the  accrued  interest  on 
the  debt  of  doubtful  validity.  The  latter  interest,  cannot  be 
followed  in  its  accrual. 

The  statement  for  1879  is  for  the  date  January  21,  1879,  and 
that  for  1881  is  for  January  1,  1881. 

The  floating  debt  in  1894,  1895,  1904,  1905.  and  1913  is 
simph^  the  amount  of  the  excess  of  warrants  drawn  over  war- 
rants paid.  There  are  other  years  in  whicli  there  was  a  similar 
excess,  but  in  these  other  years  there  w^ere  sufficient  funds  in 
the  treasury  to  take  up  the  excess.  There  were  deficiencies  also 
during  fiscal  years  which  were  removed  before  the  end  of  the 
vear. 


428 


Bulletin  of  the  University  of  Texas 


TABI.Z:   18. 

Ownership  of  tlie  State  Bonded  Debt. 


Year 

Owned  by 
Trust  Funds  in 
the  Treasury 

Owned  by 
Individuals 

Year 

Owned  by 
Trust  Funds  in 
the  Treasury 

Owned  by 
Individuals 

1865 

$         320,367.13 

320,367.13 

320,367.13 

537,008.21 

537,008.21 

537,008.2! 

537,008.21 

711,008.21 

711,008.21 

711,008.21 

711,008.21 

1,586,008.21 

2,342,108.21 

2,584,108.21 

2,643,268.82 

2,797,408.82 

2.965,640.00 

2,991,900.00 

3,017,100.00 

3,017,100.00 

3,017,100.00 

3,218,140.00 

3,226,540.00 

$         805,762.88 


1893 

3,235,040.00 
3,241,540.00 
3,241,540.00 
3,244,540.00 
3,245,040.00 
3, 2.>4, 040.00 
3,261,200.00 
3,291,200.00 
3,272.200.00 
3,301,600.00 
3,318,600.00 
3,372,600.00 
3,372,600.00 
3,.S85,6O0.00 
•  3,849, .500.00 
3,853,000.00 
3,951,000.00 
3,976,200.00 
3,976,200.00 
3,976,200.00 
3,976,200.00 
3,976,200.00 
3,976,200.00 

756,990.00 

1866 

1894 

750,490.00 

1867 

1895 

750,490.00 

1896-     

747,490.00 
746,990.00 

18<)0 

125,100.00 

1897 

1870 

1893 

737,990.00 

1S71_     

602^600^00 
630,100.00 
1,319,800.00 
3,933,588.00 
3,826,373.80 
3,224,820.00 
1,992,530.00 
1,476,630.00 
1,322,490.00 
1,272,000.00 
1,245,830.00 
1,220,630.00 
1,220,630.00 
1,220,630.00 
1,019,590.00 
768,190.00 

1899 

728,245.0") 

187"' 

1900  ..     

718, ''OO  00 

1873 

1874          

1901 

1902 

717,200.00 
687,800.00 

1875 

1908 

670,800.00 
616  800  00 

1876 

1904 

1880 

1905 

1906 

610^300  00 

1882 

603,800.00 

1883 

1907 

139,900.00 

1884 

1908      --     - 

136,400.00 
37,900 

1886 

1909 

1910 

1887.     

1,300 

1888 

1911 

T889  ... 

19"2-     - 

1890 

1913 

1891 

1914 

1892 

1915 

A  Financial  History  of  Texas  429 


Table  19. 

The  Tri-WeeMy  Telegraph  under  date  of  July  15,  1864,  con- 
tains the  Fox  Table  of  currency  values.  It  saj^s:  ''The  follow- 
ing table  showing  the  fluctuations  in  the  gold  market  here 
(Houston)  has  been  furnished  us  by  Mr.  Henry  S.  Fox,  a  re- 
liable merchant  of  this  city.  One  dollar  in  gold  has  been  worth 
the  following  amounts  in  Confederate  treasury  notes  at  the  times 
mentioned:" 

1861. 

Sept    1-30 par. 

Oct.    1-31. 1.05 

Nov.  1-30 1.10 

Dec.    1-15 1.25 

Dec.    15-30 1.50 

1862. 

Jan.  1-Feb.  8 1.50 

Feb.  8-Apr.  8 1.75 

Apr.  8-20 2.00 

ADr.  20-May  12 2.50 

May   12-22 2.75 

May   22-June    12 3.00 

June    12-19 3.25 

June  19-Aug.   9 , 3.50 

Aug.  9-Sept.   14 3.75 

Sept.  14-Oct.  31 4.00 

Nov.   1-30 3.75 

Dec.    1-31 4.00 

1863. 

Jan.  1-5    4.00 

Jan.    5-18 4.50 

Jan.  18-Feb.   9 4.75 

Feb.  9-Mch.  19 5.00 

Mch.    19-Apr.    5 4.75 

Apr.    5-14 5.00 

Apr.  14-May  3 5.25 

May  3-7   6.00 

May  7-17    7.00 

May   17-June    20 8.00 

June  20-July   4 7.00 

July  4-7   8.00 

July  7-8   8.50 

July  8-10   9.00 

July   10-Aug.    6 9.50 

A-ag.  6-Sept.   9 10.00 

Sept.   9-24    11.00 


430  Bulletin  of  the  University  of  Texas 


Sept.    24-Oct.    5 12.00 

Oct.    5-12 11.00 

Oct.   25-Nov.   7 12.00 

Nov.  7-13   11.50 

Nov.  13-16   12.50 

Nov.  16-17   13.25 

Nov.  17-20    15.00 

Nov.    20-25     , 15.50 

Nov.    25-Dec.    6 16.00 

Dec.  6-14    .; 17.50 

Dec.   14-16   18.00 

Dec.  16-31    19.00 

1864. 

Jan.  1-3    19.00 

Jan.  24-31    24.25 

Feb.  1-4    2*4.00 

Feb.    16-22    20.00 

Feb.    22-Mch.    4 21.00 

Mch.    24-Apr.    5 ,. . .  22.75 

Apr.  20-May  5 26.00 

May  25-31    ,. . .  44.00 

June    1-3    43.00 

June  30    i 28.00 

July   1    31.00 


A  Financial  History  of  Texas  431 


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A  Financial  History  of  Texas  433^ 

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in   the  Building  of  the  Nation,  vol.  3.     Richmond,   1909- 
1913. 
Ramsdell,  C.  W.     Reconstruction  in  Texas.     New  York,  1910. 
Records  of  the  Military  Board.     Mss.  Archives  of  the  State  De- 
partment. 
Report  on  Audit,  Organization  and  Method,  1909. 
Report  of  the  Special  Tax  Commission,  1899. 
Reports  of  the  Attorney  General. 

Reports  of  the  Board  of  Regents  of  the  University  of  Texas. 
Reports  of  the  Commissioner  of  the  General  Land  Office. 
Reports  of  the  Comptroller. 
Reports  of  the  Secretary  of  State. 
Reports  of  the  Secretary  of  the  Treasury  of  the  Republic  of 

Texas. 
Reports  of  the  State  Board  of  Education. 
Reports  of  the  State  Land  Board. 
Reports  of  the  State  Revenue  Agent. 
Reports  of  the  State  Treasurer. 

Reports  of  the  Superintendent  of  Public  Instruction. 
Reports  of  the  Tax  Commissioner. 
Reports  of  the  Texas  Courts  of  Civil  Appeals. 
Reports  of  the  Texas  Court  of  Criminal  Appeals. 
Reports  of  the  Texas  Supreme  Court. 

Report  of  the  Texas  Welfare  Commission.     Fort  Worth,  1912. 
Reports  of  the  United  States  Census. 


28— H 


434  Bulletin  of  the  University  of  Texas 

Report  of  the  United  States  Commissioner  of  Corporations  on  the 

Taxation  of  Corporations  in  the  Southern  and  Southwestern 

States.     Washington,  1915. 
Keport  of  the  United  States  Commissioner  of  Education,  1912. 
Reports  of  the  United  States  Supreme  Court. 
Revised  Penal  Code  of  Texas,  1911. 
Revised  Statutes  of  Texas,  1879,  1895,  1911. 
Rovre,  E.     ''The  Disturbances  at  Anahuac  in  1832."     In  the 

Quarterly  of  Texas  State  Historical  Association.  1903. 
Sayles,   J.    and   H.     Laws  of   Texas    relating   to   Real    Estate. 

2  vols.     St.  Louis,  1890-2. 
Senate  Miscellaneous  Document,  No.   169.     59th  United  States 

Congress,  First  Session.     (1906), 
Session  Laws  of  Alabama,  1835-1837, 
Session  Laws  of  Louisiana,  1820-1846. 
Session  Laws  of  the  State  of  Texas. 
Smith,  E.  A.     The  History  of  the  Confederate  Treasury.     Har- 

risburg,  Pa.,  1901. 
The   Commercial  and   Financial   Chronicle    (New   York),   vols. 

32-39. 
The  Texas  Almanac,  1858-1865.     Galveston. 
United  States  Statutes  at  Large,  vols.  9  and  10. 
Yernon's  Sayles'  Annotated  Civil  Statutes  of  Texas.     5  vols. 

Kansas  City,  1914. 
Wooten,  D.   G.     A  Comprehensive  History  of  Texas.     2  vols. 

Dallas.  1898. 
Yoakum,  H.     History  of  Texas.     New  York,  1856. 


INDEX. 

Administration,  financial,  11,  32,  360,  379-384. 

Ad  valorem  tax,  see  Property  tax. 

Agriculture,  85,  157,  158,  197,  241. 

Agriculture,  bureau  of,  25. 

Agricultural   and   Mechanical   College,   175,   200,   372,   374,   375,   376-377, 

398,  401,  402,  404. 
Amusements,  taxation  of,  10,  46-47,  142,  215. 
Anahuac,  disturbances  at,  11. 
Annexation,  30,  77,  83,  117. 
Appropriation  committee,  379. 
Appropriations  of  the  republic,  391. 
Appropriation  year,  381,  382. 
Archer,  Branch  T.,  15. 
Army,  14,  19,  21,  22,  23,  25,  26. 
Artesian  wells,  land  for,  115. 

Assessed  values,  106,  141,  165,  210,  213,  274,  413-414. 
Assessor,  39,  40,  101,  165,  204-205,  273. 
Audit,  organization  and  methods,  report  on,  382. 
Auditorial  board,  118,  181,  186. 
Austin,  Moses,  9. 
Austin,  Stephen,  9,  11,  15. 
Automatic  tax  rate  board,  370,  383. 
Available  school  fund,  see  School  fund. 

Banks,  growth  of,  158-159,  198,  242,  293;  incorporation  of,  108,  158, 
215,  242,  248;  proposed  for  the  republic,  61,  70;  taxation  of,  108,  215, 
291-293. 

Bell,  Governor,  86,  87,  90,  91,  119,  120,  122,  123. 

Bell  Ptinch  Law,  216,  294. 

Benjamin,  Judah  P.,  135,  137. 

Benton,  Senator,  120. 

Blind  Institute,  89,  249. 

Boards  of  equalization,  102,  210,  211,  277,  287,  288. 

Bond  sale  receipts,  405. 

Boundary  dispute,  120,  406. 

Bounties  on  wild  animals,  246. 

Bribery,  charge  of,  164,  195. 

Bridge  companies,  taxation  of,  293. 

Bright,  Senator,  125. 

Budget.  389. 

Burnley,  60. 

Burnet,  President,  12,  17,  19. 

Business  taxes,  forms  of,  10,  37,  43,  107,  111,  142-143,  168-171,  214-219, 
288,  293,  294,  301,  303,  311. 


436  I)idex 

Campbell,  Governor,  274. 

Canals,  92. 

Capital  stock  tax,  303. 

Capitol,  89,  223,  251. 

Car  companies,  taxation  of,  217,  218,  293,  303-304,  310. 

Centralized  administration,  48,  210,  214,  279,  330,  333,  336,  341,  343,  344, 

387. 
Charities  and  corrections,  385,  395-396. 
Charter  fees,  220,  265,  322-324. 
Chase,  Senator,  125. 
"Chicken  Salad  Case,"  263. 

Cities,  population  of,  83,  114;  taxes  of,  57,  113,  211-212,  281-283. 
Civil  War,  period  of,  134-155. 
Classified  net  receipts,  405. 
Clay,  Senator,  121. 

Coke,  Governor,  164,  166,  194,  196,  201,  209,  213,  227,  229,  233,  236. 
Collecting  agencies,  taxation  of,  310. 
Collection  of  taxes,  11,  12,  32,   42,  44,  48,  101.  103,   104,  165,  205,   2^^C, 

268,  273. 
Colquitt,  Governor,  255,  263,  270,  274,  358,  380,  384. 
Commercial  treaties,  29,  35. 
Comptroller,  14,  103,  104,  108,  118,  136,  160,  163,  174,  187,  188,  189,  191, 

194.  199,  205,  207,  214,  217,  218,  268,  269,  287,  288,  304,  379,  381,  382, 

383;  reports  of,  184,  188,  189,  193,  203,  237.  278,  298,  356,  361,  364,  365. 

400,  401,  404,  406,  407,  408,  410,  411,  415,  418,  419,  425. 
Confederate  notes,  136,  138,  139,  141,  145-148,  151,  155.  419.  429. 
Confederate  States'  taxes,  144. 
Confederate  veterans'  home,  250. 
Conservation,  385. 
Constitution,  defects  of,  386. 
Constitutional  convention  of  1866,  179-181. 
Corporations,  taxation  of,  107,  265,  286-293.  301-315. 
Corwin,  Secretary,  122,  123,  126. 
Cost,  loss  and  waste  in  assessment  and  collection  of  taxes,  110,  272-27o, 

424. 
Cotton  operations  of  the  military  board,  136,  150-151. 
Cotton  tax,  Federal,  168. 
County  taxation,  see  Taxation. 
Credit  agencies,  taxation  of,  310. 
Credits,  taxation  of,  see  Intangible  property. 
Culberson,  Governor,  254,  255,  313,  314,  326,  369,  370. 
Gushing,  Attorney  General,  122,  126. 
Custom  duties,  see  Tariff. 

Dairy  and  food  commissioner,  247. 

Davis,  Governor  E.  J..  157,  161,  166,  167,  171,  175,  193,  194,  200. 

Deaf  and  Dumb  Institute,  89. 


A  Financial  History  of  Texas  437 

Dealing  in  futures,  taxation  of,  310. 

Debt  of  the  republic,  amount  of,  17,  18,  59,  82,  117,  118,  126,  391;  assump- 
tion by  the  United  States,  117,  118,  124-126;  audited  drafts,  64,  65; 
barring  claims,  130;  depreciation  of,  23,  69,  71,  72,  75,  77,  78,  81,  128; 
Erwin  loan,  16,  53,  81;  general,  15,  20,  23,  25,  29,  62;  McKinney 
loans,  13,  53,  181;  naval  debt,  63;  ownership  of,  119,  128;  payment  of, 
63,  83,  123,  131,  149;  payment  of  in  land,  53,  115,  117,  118,  120;  Penii 
sylvania  Bank  of  the  United  States,  60,  62,  63;  rating  ot  claims,  66, 
73,  74,  79,  81,  118,  123,  124.  129;  refunding,  118;  treasury  notes,  67-77, 
stoppage  of  interest  on,  130;  Triplett  loan,  13,  53,  181. 

Debt  of  the  state,  117-132,  149-152,  177-194,  229-239,  355-360,  389;  amount 
of,  132,  193,  238,  355,  426;  Civil  War,  149-152,  177-179;  constitutional 
provisions,  132,  174,  185,  232,  233,  237;  depreciation  of,  139,  151,  229, 
236;  floating,  132,  140,  149,  151,  193,  196,  227,  229,  231,  426,  427;  price 
at  issue,  191-192,  230,  233-234,  239;  payments  on,  395-396;  Reconstruc- 
tion, 193,  230;  repudiation,  179-181,  186,  190;  to  special  funds,  153-154, 
173,  174,  178,  183,  188-189,  236. 

Defaulting  officials,  165,  195. 

Deficiency  warrants,  381. 

Deficits  of  treasury,  140,  149,  192,  196,  227,  235.  359. 

Density  of  population,  84,  158,  197,  241. 

Direct  taxes  of  republic,  receipts  from,  391. 

Direct  tax  of  1866,  167-168. 

Direct  versus  indirect  taxation,  32,  34,  36,  47,  49.  50. 

Discriminating  taxes,  30,  35,  36,  37,  38.  45,  46. 

Districts,  see  Independent  taxing  districts. 

Donations,  14,  15. 

Double  taxation,  321,  387. 

Drummers'  tax,  216,  294-295. 

Education,   26,    87,   94-98,   154,   157,   161,   209,   225-228,   244,   249,   361-37S, 

385,  395-396.     See  also  Higher  education,   School    funds,    University, 

Agricultural  and  Mechanical  College,  and  Normals. 
Electric  companies,  taxation  of,  306. 

Equalization,  agencies  of,  102.     See  also  Boards  of  equalization. 
Evasion  of  taxation,  45,  107-109,  113,  141,  144,  165,  169,  170,  206,  207, 

209,  213,  219,  274,  277,  292,  300,  317,  321. 
Exchequer  bills,  see  Treasury  notes. 
Excise,  9,  12,  44. 
Exemption  from  taxation,  10,  11,  12,  14,  38,  99,  100,  194,  204.  218,  290, 

292,  296,  307,  308,  311,  312,  313,  316,  389. 
Exemption  of  improvements,  138,  388. 
Expenditures,  18-27,   61,  65,   70,  76,   78,  86-93,  96,  134-139,  153,   160-164, 

199-202,  385,  391. 
Experiment  stations,  246. 
Export  tax,  10. 
Express  companies,  taxation  of,  217.  218,  293,  304. 


438  Index 

Factories,  state,  88,  138,  259. 

Farms,  state,  260. 

Fee  system,  161,  253-256. 

Fees  for  assessment  and  collection  of  taxes,  33,  40,  101,  205. 

Fees  of  departments,  etc.,  116,  220,  265,  322-324,  377,  405. 

Fence  cutting,  25l 

Ferguson,  Governor,  256,  280,  308. 

Ferry  companies,  taxation  of,  293. 

Fifty  Cents  Law,  327,  331. 

Fillmore,  President,  122. 

Financial  administration,  cost  of,  395-396.     See  also  Administration. 

Fire  insurance  commission,  248. 

Fiscal  year.  381,  418. 

Fish  commission,  245. 

Forced  loan,  10. 

Forester,  state,  246. 

Fox  Table,  429-430. 

Franchises,  taxation  of,  287,  293,  303,  304,  311-313,  314,  315,  409. 

Free  grass,  332,  335-336. 

Frontier  defence,  88,  191.  201. 

Full  Rendition  Law,  277-278. 

Funding  of  debt,  229-231,  236,  238. 

Game,  fish  and  oyster  commissioner,  245,  298. 

Gas  companies,  taxation  of,  217,  306. 

General  administration,  cost  of,  395-396. 

General  land  office,  55,  83,  209,  220,  322,  325,  330,  336,  341,  344.  345,  352, 

353,  382,  408. 
General  property  tax,  see  Property  tax. 
General  revenue  fund,  87.  188,  192,   198,   200,   201,   203,   213,   21 9, 

226,  230,  236,  238,   315,  355,  356,  358,  359,  369,  372,  375,  397, 

399,  400,   410,  411,  416,  417,  423. 
Geological  survey,  89,  200. 
Gilmer,  60. 
Gross  receipts,  taxes  on,  142-144.  170-171,  218,  293,  301-310,  313,  314. 

Hamilton,  A.  J.,  177. 

Hamilton,  .lames,  60,  61. 

Health  and  vital  statistics,  board  of,  2  46. 

Henderson,  Governor,  117. 

Higher  education,   97,  98,  175.  227,  372,  403. 

Highways,  385. 

Hogg,  Governor.  254,  311,  313,  314,  362,   363. 

Home  rule,  3  88. 

Homesteads,  land  grants  for,   52,   115-116,  172,   222,  328. 

Homestead,  tax  on,  166,  389. 


A  Financial  History  of  Texas  439 

Houston,  Sam,  18,  19,  20,  21,  23,  24,  25,  30,  32,  33,  34,  47,  48,  50, 

54,  56,  62,  65,  67,  69,  70,  75,  77,  87,  109,  118,  140,  427. 
Hubbard,  Governor,  209,  235. 
Hypothecation  of  state  bonds,  172,  191,  193. 

Hliteracy,   97,  157,   228. 

Income  tax,  10,  99,  142,  143,   144,   168-170,   388,   409. 

Indemnity  bonds,  86,  95,  110,  121,  133. 

Independent  taxing  districts,  212,  228,  283-285,  287,  368,  369. 

Indians,  19,  20,  21,  24,  25,  26,  49,  88,  141,  161. 

Industrial  accident  board,  247. 

Inheritance  tax,  320-321,  409. 

Insurance  companies,  taxes  on,  142.  143,  170.  217.  290-291.  307-310. 

Insurance,  statistics  and  history,  department  of,  200. 

Intangible  assets  tax,  266,  287-288,  293. 

Intangible  property,  107,  170.  204,  206,  275-276,  279,-387,  413. 

Interest  on  funds,  220,  265,  405. 

Interest  on   warrants,    64,   149,    178,   182,    185,    186,   194,    227,    229, 

236.  360. 
Interna]  improvements,   26,  87,  89-93,  95,  223,  231. 
International  Railroad  subsidy,   163,  194,  231-232. 
Investment  of  special  funds,  220,  233,  327,  357,  361-364,  372,  373. 
Ireland,  Governor,  274,  335,  336. 
Iron  industry  at  Rusk,  258-259.  > 

Jester  amendment,  363,  370. 

Johnson,  President,  156,  181. 

Jones,  Anson,  18,  41,  32,  48,  65,  70,   77,  83. 

Judiciary,  86,  161,  253,  395-396. 

Labor  statistics,  bureau  of,  247. 

Labor  unions,  260,  318. 

Lamar,  Mirabeau  B.,  19,  21,  23,  30,  31,  47,  50,  56,  60,  65,  69,  70,  78. 

Land,  dues  and  fees  from,  11,  13,  15,  53-54,  2  20;  grants  to  asylums, 
89,  116,  172,  222,  353;  grants  to  education,  26,  53,  95,  116,  223, 
225,  228,  325,  327,  376;  grants  to  factories,  145;  grants  for  home- 
steads, 52,  115-116,  172,  222;  grants  to  immigrants,  51,  52;  grants  for 
military  and  naval  service,  14,  51;  grants  for  pensions,  201,  250, 
325,  327;  grants  to  railroads,  53,  89,  90,  92,  11-5,  163,  172,  223.. 
326;  grants  for  state  capitol,  223,  251,  326,  340;  interest  on  pur- 
chase notes,  226,  329,  330,  331,  334,  337,  339,  341,  347;  lease  of, 
95,  226,/  332,  334-337,  339.  342,  405;  mineral,  345-350;  pre-emption 
policy,  54,  55,  115,  172,  223,  338;  prices  on,  114.  145,  145,  329,  330, 
333,  339,  340,  343,  344,  347.  348;  receipts  from  sale  of,  54,  154, 
172,  223,  226,  338,  350-351,  361,  391,  405,  406;  sale  of  ta 
United  States,  117;  school,  114,  172,  222,  329-352;  sale  of  scrip, 
54;  timber,  342-345;  university,  97,  116,  172,  222,  327,  337,  338.. 
339,   352-353. 


440  Index 

Lanhara,  Governor,  274,  293. 

Legislature,  83,  160,  263,  395-396. 

Levee  and  drainage  board,  246. 

Library,  state,  248. 

License  taxes,  see  Occupation  taxes. 

Liquor  taxes,  28,  29,   31,   37,   43,   44,   112,    142,    143,   144,   215,    216,   218, 

298,  299;  300,  310. 
Livestock,  assessed  values  of,  413. 
Livestock  sanitary  commission,  245. 
Loan  commissioners,  15,  60,  62. 
Loans,  see  Debt. 
Lochridge,  Lloyd,  255,  274,  317. 
Lubbock,  Governor,  145,  147,  427. 

McKinney,  Thomas  F.,  13,  53. 

Manual  training,  247. 

Manufacturing,  85,  158,  197,  241. 

Merchandise,  assessed  values  of,   413. 

Mileage  basis  of  apportioning  taxes,  214,  286,  287,  302,  303. 

Militia,  state,  252,  253,  395-396. 

Military  board,  136-138,  146,  148,  149,  150,  153,  155. 

Mineral  lands  and  minerals,  see  Land. 

Minimum  valuations  for  taxation,  39.  49,  109. 

Mining,  197,  242,  247,  349. 

Money,  taxation  of,  see  Intangible  property. 

Mortgages,  taxation  of,  204,  387. 

Murrah,  Governor,  137,  144,  147,  151. 

Navy,  19,  21,  22,  23,  25,  26. 

Negro  normal,  227. 

Negro  population,  83,  157,  197,  228,  240. 

Non-resident  taxpayers,  37,  38,  46,  100,  108,  141,  165,  206,  213.  268, 

271,  276,  292. 
Normal  schools,  227,  249,  372,  377. 

Occupation  taxes,  general,  37.  43,  44,  75,  99,  107,  111-113,  133, 
142,  170,  203,  215-217,  294-300,  391,  409;  corporation,  142-143, 
170-171,  217,  218,   301-310,  409. 

Oil  dealers,  taxation  of,  310. 

Oil  producers,  taxation  of,  310. 

Oyster  beds,  rental  of,  3  2  8. 

^Oyster  commissioner,  245. 

Palm,  Swante,  177,  4  27. 
Tanic  of  1837,  62. 

Panic  of  1873,  196,  199,  262,  327,  386. 
Panic  of  1893,  313,  370. 


A  Financial  History  of  Texas    ,  441 

Pearce,  Senator,  121,  124. 

Pease,  Governor,  88,  90,  91,  95,  96,   111,   113,   127,   129,   136,   138. 
151,  167,  177,  427. 

Penalties,  264,  408. 

Penitentiary,  26,  88,  138,  162,  201,  244,  256-262,  358,  398,  402. 

Pensions,    89,    200-201,    231,    238,    249,    250-251,     281,    325,    327, 
395-396. 

Permanent  appropriations,  381. 

Permanent  school  fund,  see  School  fund. 

Permit  fees,  32  3. 

Personal  property,  taxable,  46,  204,  206.  See  also  Intangible  prop- 
erty and  Property  tax. 

Pipe  line  companies,  taxation  of,  310. 

Pistol  dealers,  taxation  of,   310. 

Poll  tax,  45,  46,  113,  133,  141,  171,  173,  203,  219-220,  265,  316-319, 
409,  412. 

Population,  9,  18,  83,  157,  197,  240. 

Port  fees,  35. 

Postal  service,  31,  56. 

Prairie  View  Normal,  372,  374,  377. 

Pre-emption  policy,  see  Land. 

Prices,  69,  71,  139,  148,  394. 

Property  tax,  ad  valorem  rates  of,  36,  37,  106,  140-141,  165,  166, 
211,  280-281,  383,  412:  delinquency,  42,  105,  166,  207,  208. 
269-272,  274;  discriminatory  rates  based  on  jurisdiction,  36,  37, 
38,  45.  46;  discriminatory  rates  based  on  quantity,  37,  46;  exemp- 
tions, 38,  99,  100,  194,  204,  267;  false  rendition,  41;  forced  sale, 
42,  105,  141,  166,  208,  209,  269-270;  importance  of,  49,  203,  265; 
lien  under,  105,  208,  271;  modified  as  a  business  tax,  214-215, 
280-294;  oath  required,  41,  101,  102;  operation  of,  45,  49, 
106-111,  141,  267-269;  place  of  assessment,  39,  49,  100,  141, 
206;  property  enumerated,  36,  100,  267;  receipts  from,  409; 
redemption  of  property  sold  for  taxes,  42,  105,  141,  270;  releases  from, 
268;  scope  of,  99,  204,  267;  specific  rates,  36,  37,  99;  statute  of  limita- 
tions, 270;  time  of  assessment,  100,  209,  268;  unrendered  property,  40. 
100,  101.  102,  207,  208^209,  268-269;  valuation,  39,  101,  102,  106,  109, 
210,  277. 

Protection  to   persons  and  property,  expenditures  on,  385. 

Protective  tariff,  31. 

Public  buildings  and  grounds,  395-396. 

Public  printing,  395-396. 

Publishers,  taxation  of,  310. 

Pullman  Company,  taxation  of,  303. 

Railroad  commission,  245,  289. 

Railroad,  state,  261,  358. 

Railroads,      aid      to,      89,      92,      96,      115,      153,      162,      172,      173-175, 


442  Index 

194,   231,   362;    mileage  of,   84,   158,   198,   243;    taxation   of,    100, 

107,  194,  214,  286-289,  301-303,  413. 
Rangers,  252-253. 

Real  property,  assessed  values  of,  413. 
Receipts,  general,  140,  203,  264. 
Reciprocity,  29,  35. 
Reconstruction  period,  156-19  5. 
Reformatories,  state,  262. 

Refunds  by  United  States  Government,  129,  162,  264,  407,   418. 
Relinquishment  of  state  taxes,  87,  110,  268. 
Republic  of  Texas,  see  Debt,  Property  tax,  etc. 
Repudiation,  see  rating  and  repudiation  under  Debt. 
Revenue,  payable  in  what,  14,  34,  50,  55,  5  6-5  7.   65,  7  2,   7  5,  7  6,  7  7, 

80,  104,  114,  145,  146. 
Revenue  agent,  248.  • 

Revolution,  the  Texas,  12,  13-17. 
Roberts,  Governor,  174,  216,  218,  219,  226,  228,  235,  236,  237,  238, 

294,  357,  364. 
Robertson  Law,  308. 

Ross,  Governor,  254,  270,  274,  330,  336. 
Royalties,  346,  350. 
Runnels,  Governor,  109. 
Rural  high  schools,  246. 
Rural  population,  84,  241. 

Salaries,  20,  22,  23,  24.  33,  83,  87-88,  139,   160,   164,  199,  262-263. 

Salary  tax,  143.  169-170,  409. 

Saligny,  M.  de,  61,  62. 

Sam  Houston  Normal,   227. 

Santa  Fe  Expedition,  71. 

Sayers,  Governor,  274,  340,  363. 

School  districts,  212. 

School  fund,  amount  of,  173,  225;  apportionment  of,  96,  173,  226, 
371;  available,  173,  212,  219,  225,  229,  314,  363,  367-371,  399, 
420-421,  423;  Civil  War.  135,  137,  146,  151,  153;  endowment  of, 
87,  94,  173,  225,  422;  expenditures  of,  96,  138,  153;  loan  of  to 
railroads,  91,  92,  95-96,  145-146,  150,  173-175;  permanent,  173, 
220,  225,  340,  351,  361-366,  423;  Reconstruction,  161,  173-175, 
180,  183.  188-190;   taxation  for,  94,  96,  173,   198,  226,  367,   422. 

School  taxes,  97.  113,  228,  283. 

Sea  vessels,  land  for,  115. 

Reparation  of  sources  of  state  and  local  revenues,  3  8  6-3  87. 

Sheep  inspector,  office  of,  245. 

Single  tax,  388. 

Sinking  fund,  60,  140,  151,  191,  192,  233,  237,  238,  356,  359,   370. 

Slaves,  83,  141,  165.  413. 

Smith,  Henry,  34,  68. 


A  Financial  Ilistonj  of  Texas  443 

Smuggling,  31,  33. 

Social  expenditures,  24  8. 

Special  taxes,  251,  279,  280,  378. 

Specie  tax,   140,  145,  146,  149. 

Specie,  scarcity  of,  7  6,  7  8,  14  6. 

Spoils  system,  2  62,  3  90. 

Stamp  duties,  10,  11,  15. 

State  engineer,  2  4  5. 

State  enterprises,  88,  13  8.  See  Factories  and  Farms.- 

State  land  board,  333. 

State  lylice,  162. 

Steamboats  and  stage  coaches,  taxes  on,  306. 

Street  railways,  taxation  of,  306: 

Subsidies,  see  Land  and  Internal  improvements. 

Sumptuary  taxes,  47,  215,  298. 

Superintendent  of  public  instruction,  249. 

Swisher,  J.  M.,  138. 

Tariff,  arguments  for,  32;  dutiable  articles,  11,  14,  28,  31;  free  list, 
14,  29,  30;  general,  10,  11,  12;  opposition  to,  31-32;  purpose,  31, 
rates,  14,  28,  30,  31;  receipts  from,  15,  30,  33  34,  391. 

Tax  board,  248,  266,  287,  293,  387. 

Tax  ferrets,  279. 

Tax  rates,  370,  383.     See  also  Property  tax  and  Tariff. 

Taxpayers'  Convention  of  1871,  167,  173. 

Taxation,  constitutional  provisions,  28,  99,  173,  204,  206,  210,  211, 
212,  214,  215,  219,  227,  280,  281-284,  314,  370,  378. 

Taxation,  importance  of,  12,  49,  110,  133,  140,  165,  203. 

Taxation,  local,  57,  58,  166,   173,   215,  217,  281-285,   368,   370. 

Taxation,  weight  of,  12,  144.  166-167. 

Tax  lien,  166,  219,  271. 

Tax  titles,  109,  166,  265,  271. 

Taxes,  receipts  from,  405. 

Telegraph  companies,  taxation  of,  170-171,  214,  217,  218,  293,  305. 

Telegraph  and  telephone  property,  assessed  values  of,  413. 

Telephone  companies,  taxation  of,  305. 

Terminal  companies,  taxation  of,  310. 

Terrell,  H.  B.,  263,  321. 

Thompson,  Senator,  12  5. 

Throckmorton,  Governor,   144.   156,  167. 

Timber  lands  and  timber,  see  Land. 

Tithes,  10. 

Tobacco  monopoly,  10,  11. 

Tonnage  dues,   14,   35-36. 

Treasury  notes,  16,  20,  22,  23,  32,  34.  55,  57,  67-77,  122,  391. 

True  values  of  property.  106,  165,  209,  274. 

Tuberculosis  sanatorium.  2  4  6. 

Twelfth  Legislature,  164,  186. 


444  hidex 

Undervaluation  of  property,  106,  10.8,  109,  165,  209,  213,  274. 
Uniform  rule  in  taxation,  99,  215,  267,  288,  296,  297,  299,  303. 
University,  53,  87,  97,  98,  132,  151,  154,  175,  180,  183-184,  188-190, 

222,-224,   227-228,    233,    249,    327,    337,    338,    339,    352-353,    359, 

372-376,  380,  399,  404. 
Unorganized  counties,  205,  206,  208,   209,  211,  214,  271,   287,   330. 

Veto,  governor's,  111,  226,  237,  247,  356,  375,  380,  384. 

Warehouse  regulation,  24  6. 

Warrants,  classification  of,  395-396. 

Warrants,  state,   135,  139,   145,   147,   149,   151,   174,    180,   19*4,  227, 

229,  236,  359,  369,  370. 
Water  engineers,  board  of,  246. 
Water  companies,  taxation  of,  306. 
Wharton,  William,  15. 
White  and  Chiles,  137. 
Wood,  Governor,  117,  118,  119,  120. 


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